Wallenberg attacks plan for revised take-over directive

Date: 31/01/02

JACOB Wallenberg, the business tycoon whose €18 billion family share portfolio includes stakes in many of Sweden's leading companies, has described new proposals for an EU take-over directive as legalised theft.

In an interview with European Voice, Wallenberg said moves to change the current regime would breach common-law freedom of contact and result in a 'field day for punters and hedge funds' interested only in short-term gains.

His family controls 'foundations' which are the largest shareholder in industrial firms SKF and Stora Enso, together with Swedish airline SAS. They also hold a 45 share in Investor - which in turn has large stakes in Ericsson, Electrolux, ABB and Astra Zenica.

Many of the holdings, built up over the last century, are in the form of preferential shares with special voting rights which allow the Wallenbergs to block unwanted take-over bids.

But those voting rights would be effectively extinguished if the EU backs proposals for the new take-over directive tabled earlier this month by a group of company law 'wise men'.

Wallenberg said this would be a clear breach of 'common law' freedom of contract, under which companies can issue more expensive special shares to certain investors.

'If you pay money for a car and I one day take that car from you then you get angry. Why should I not get upset if I have paid money [for a share] and someone takes it without compensation? That is expropriation. In more harsh language you could call it theft,' he said.

The move would mean companies such as Ericsson - protected from take-overs since the 19th century - would now be a sitting duck for would-be bidders with 'a lot of capital'.

'Ericsson is a company that has had a stable ownership structure. Overnight, I can see a number of international players that would now take a serious look,' said Wallenberg, predicting a 'field day for punters and hedge funds' interested in short term returns and a demise of long-term investing.

'Is that what we want to happen? I for one would say that would be highly negative and against the freedom of contract.'

He rejected claims that ridding special share ownership rights would add dynamism to the EU economy by paving the way for new owners to restructure companies such as Ericsson and bring in new managers.

'I can see why people say that but I happen to have put money in that company in 1920 - and I happen to think I have a fairly well developed idea of what is good and bad for the company.'

Meanwhile he claimed the proposals would fail to create a level playing with the US, where preferential shares - along with a host of other systems thwarting take-over bids - are allowed.

'Where is the US stuff? The answer to that question is that the group of wise men has decided that the US may move wherever they go...and say 'ok we are going to take down the pants of most of the European countries while the Americans can play around with their tricks'.'

'I would say that is a long-term potential consequence that has not been debated in their paper...I think the domino effect could be quite severe and hence, Brussels should not tinker around with this.

'If they are going to tinker around with this then I say bring in the Americans and let's have a real level playing field,' he added.

Wallenberg, who is also chairman of Sweden's SEB bank, is one of the elite Europeans behind the secretive Bilderberg group. Described by some as a shadow government, it has sought to exert its influence over the world's leading politicians since it first met in 1954 at a Dutch hotel from which it took its name. Wallenberg's Investor Group hosted last year's meeting of the group in the west coast Swedish town of Stenungsbaden.

Interview with Jacob Wallenberg, the Swedish business tycoon, who is opposed to the new proposals for an EU take-over directive.