State-owned bank Leonia and Finland’s largest insurance group Sampo have agreed upon a merger of equals in order to create the first Finnish full service financial group. The merger agreement was signed on 13 October 1999 and was approved by the Finnish government’s Cabinet Committee on Economic Policy.
The new group shall be called Sampo-Leonia and it will have a leading position in the insurance sector and a strong grip of the banking market also. The CEO of Sampo, Mr Jouko K Leskinen, shall continue as the CEO of the new group.
The shareholders of Sampo will hold 57 % and the Finnish State 43 % of Sampo-Leonia. Before the merger, however, Leonia is to pay the State of Finland a special dividend of EUR 505 million (FIM 3,0 billion), including taxes, and correspondingly, Sampo is obliged to pay a special dividend of EUR 202 million (FIM 1,2 billion) to its shareholders. The special distributions of dividends have been taken into account when considering the exchange ratio in the merger.
As a significant extension to this merger Sampo-Leonia acquired Skandia’s (of Sweden) Pohjola shares – Pohjola being the strongest competitor of Sampo in the insurance market in Finland. Sampo-Leonia having a target of combining Pohjola to the new group now owns 23.6 % of Pohjola’s share capital and 32,7 % of its voting right. The asset value of the shares acquired from Skandia was FIM 3.4 billion, which is EUR 577 million.
Sampo-Leonia and Pohjola anticipate to commence negotiations of bringing Pohjola as part of the new financial services group in order to carry out the aimed three-way merger to form a competitive Finnish provider of bancassurance services.
This article contains general information on the subject matter and shall not be relied upon for a specific case. Specialist advice should be sought with respect to any specific circumstances.
