Ericsson should court US takeover, says big investor
One of Ericsson’s biggest shareholders has urged the board of the Swedish telecoms equipment maker to seriously consider a proposal that the US take a controlling stake in both it and rival Nokia, as the former prime ministers of Sweden and Finland called the idea a wake-up call for Europe.
US attorney-general William Barr said on Thursday that the US and its allies should actively consider proposals for “American ownership of a controlling stake” in Ericsson and Nokia to combat the growing strength of China’s Huawei, sending shares in both Nordic companies up more than 4 per cent on Friday.
Christer Gardell, co-founder of Europe’s largest activist investor Cevian Capital, which is Ericsson’s largest shareholder by capital but not by votes, told the Financial Times: “This is real. I think the US would do whatever it takes — and costs — to get their hands on Ericsson.”
He added: “For the board of Ericsson, it is almost impossible not to engage in these discussions. [It would be] very risky not to.”
Cevian owns about 9 per cent of Ericsson’s capital. Mr Gardell argued that “Swedes and Europeans have so far not understood what 5G is all about”. He claimed that Ericsson was in a better position than Nokia to do a deal with the US, “most likely” with a company such as Cisco or Qualcomm.
Sweden’s and Finland’s business ministers both refused to comment as did Ericsson. Nokia said: “We always welcome investor interest in Nokia,” but declined to comment further.
The US has become increasingly concerned about the market power of Huawei but has been unable to convince many of its allies — most recently the UK — to break completely with the Chinese telecoms equipment maker. As a result, some in Washington want to see more radical action.
Two former prime ministers of Sweden and Finland told the FT that Europe needed to wake up to the strategic importance of Ericsson and Nokia for the continent as it struggles to fight back against the broader technological supremacy of the US and China.
“As the Barr speech indicates, Ericsson and Nokia are the frontline in the geotechnical battle shaping the future,” ex-Swedish prime minister Carl Bildt told the FT.
He argued that Brussels should take the companies more seriously. “One could promote Ericsson and Nokia at least verbally with the same fervour that Beijing promotes and defends Huawei. And then be firm in demanding a level playing field by exposing how the state financial might of China distorts competition in this sector,” he added.
Alex Stubb, a former Finnish prime minister and foreign minister, said in a separate interview: “These companies are becoming strategically important. If and when geopolitics is about economic competitiveness and data competitiveness as much as security, companies like Nokia and Ericsson need to be taken much more seriously by the EU.”
Finland’s national investment fund Solidium is the biggest shareholder in Nokia with a 3.9 per cent stake, which it bought in 2018 in the “nationally very important company”, whereas the Swedish state has no shareholding in Ericsson, whose biggest shareholder by votes is the Wallenberg family investment vehicle, Investor.