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Aga, Astra, Esab, Gant, Scania, Skandia, Stora, Volvo PV … The list of Swedish listed companies that have been acquired by foreign owners or risk capitalists in the last twenty years can be made extensive. Here, the authors analyse the theories and mechanisms behind this trend. What role do the Swedish system for corporate governance and the Swedish rules for acquisition play for the possibility to acquire Swedish companies? And what are the differences between Sweden and other countries?
The book takes its starting point in situations with hostile bids, i.e. where the buyer acquires a company against the management’s wishes. The bidding fights in the life insurance company Skandia and the lorry manufacturer Scania are described in two initiated case studies.
The author, SOPHIE NACHEMSON-EKWALL, points out that on the current open capital markets, large elements of institutional ownership, the orientation of Swedish shareholders and the adaption in Sweden to various EU-regulations have not only made it easier to buy Swedish listed companies in particular, but also to favour a short-term perspective in the management and control of Swedish listed companies. Shareholders’ interests have been given priority to employees, customers and society.
Finally, there are some suggestions for how corporate governance and acquisition rules in Sweden should be changed in order to recreate the ability of listed companies and Swedish industry to create a long-term and sustainable value.
More consideration is needed on the capital market
Sophie Nachemson-Ekwall presented her book at an SNS breakfast seminar on March 20, 2014. She talked about the importance of introducing a sluggishness into the financial system:
”Boards of directors need peace and quiet in order to be able to make wise decisions with a long-term perspective.”
The book was discussed by ALBIN RÄNNAR, Head of Market Surveillance, Swedish Shareholders’ Association, ANDERS OSCARSSON, Owners’ Representative at AMF, ANNIKA POUTIAINEN, Head of Surveillance at Nasdaq OMX Stockholm and ALEKSANDAR ZUZA, Investigator on Business Questions at IF Metall. Anders Oscarsson welcomed a long-term view on the acquisition and sales of companies:
”We cannot buy and sell companies with a very short-term perspective. Our task is to do our best for the customers and in certain cases one would have to go against both the company management and other shareholders in order to pursue what we think would be the best in the long run. Then, we can also be wrong – one has to be humble enough to say that.”
Annika Poutianen said that it has been difficult to discuss self-regulation in Sweden:
”When I worked at Finansinspektionen, I realized very quickly that there are two sacred cows, shares with differential voting rights and Swedish self-regulation. I find that it has been difficult to have an objective discussion on these issues. But I still find that there is currently a greater openness to evaluating self-regulation in a different way than previously.”
Aleksandar Zuza considers that the balance of power between owners and trade unions works tolerably well in Sweden but that all systems have their weaknesses. Sophie Nachemson-Ekwall concluded by stating that the problem with foreign hostile bids is not due to lack of information:
”All cards are on the table. But once one has started to study the bids, one is stuck in a quagmire of regulations. The Swedish rules of the game are not applicable in a global perspective. We need to make an overall survey of rules and institutions on company acquisitions.”
SOPHIE NACHEMSON-EKWALL is a researcher at Stockholm School of Economics. She has a background as a prize-winning journalist in economics and is the co-author of documentary books on ABB (2003) and Skandia (2004). The book builds on her doctoral thesis on international hostile bids, defended at Stockholm School of Economics in 2012.