OLD MUTUAL, the Anglo- African insurance group, said that it would press ahead with its £3.3 billion offer for Skandia, the Swedish insurer, despite failing to win the backing of the target company’s board.

The group intends to go directly to Skandia shareholders next month with proposals to form a company with a value of almost £8 billion and a strong position in South Africa, the UK, Sweden and the US. Eight members of the 11-strong Skandia board have rejected Old Mutual’s proposals.

Old Mutual was told by the Skandia board that its proposal undervalued “Skandia’s market position, underlying strategic value and attractive growth opportunities”.

Skandia’s biggest market is the UK, where its products include unit-linked assurance, mutual funds and protection. It also owns Bankhall, which provides services to independent financial advisers.

The group has almost 6,000 employees in the UK — in London and Southampton — and generated sales of £584 million in the first half of the year.

Skandia told the South African company that the proposed combination lacked “industrial logic”, particularly as the two companies had only slightly overlapping operations.

Old Mutual has its headquarters in South Africa and is listed in the UK and South Africa. Only 5 per cent of its funds under management are in the UK. It said that the logic of a deal was compelling and that a deal provided prospects of “enhanced growth with reduced risk for all shareholders”.

Jim Sutcliffe, chief executive of Old Mutual, said that more than half of Skandia’s shareholders backed the deal. He added: “We have met with holders of more than 60 per cent of Skandia’s shares in recent weeks and received positive indications on the merits of our proposal from a vast majority of them.”

Old Mutual added that it was pleased that Skandia had chosen to co-operate with preparation of a shareholder prospectus containing details of the offer and which is expected to be published in October.

Although Skandia generates most of its profits outside Sweden, the potential sale has provoked public opposition, with Skandia being referred to as the “crown jewel” of Swedish industry. The company reported a loss of SKr1.47 billion (£105 million) in the quarter to June 30, taking a SKr1.15 billion charge on Bankhall.

Old Mutual says that it needs the backing of shareholders holding 90 per cent or more of Skandia’s shares for the bid to proceed. It will publish its prospectus in mid-October with the tender offer likely to close around the end of November.

Analysts said that Old Mutual could find it hard to win over Swedish retail investors and some pension funds, together holding 30 to 35 per cent of Skandia’s shares.

Sweden’s state AP2 pension fund, which, according to Skandia’s website, owns 3.2 per cent of Skandia, said it had decided to reject Old Mutual’s bid.

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