The Destroyer of Swedish Capitalism

by: Felix Salmon

For a wonderful real-world example of Martin Wolf's take on global capitalism, check out Niklas Magnusson's profile of Swedish activist investor Christer Gardell. This being Sweden, Gardell isn't only unpopular with unions and other leftists, he's even unpopular with shareholders:

The Swedish media has called him "the corporate pirate" and "the bad boy of Stureplan," after Stockholm's financial district ...

Gardell and Forberg, 42, have stirred up controversy in Sweden, a society built on consensus and compromise in which public criticism of company executives is rare ...

"I am very skeptical in regards to these venture investors' way of breaking up companies," [former prime minster Goran] Persson told Swedish television during the national election campaign, which the Social Democrats lost in September 2006. "It is they who will destroy the national capitalist structures." ...

After buying a stake in Volvo (OTCPK:VOLVY) in the autumn of 2006, Gardell demanded a change of top management at a construction equipment unit.

That move drew criticism from shareholder Carl Bennet, a Swedish investor ...

When Gardell and Forberg called in 2005 for the sale of Skandia, the only company still trading on the Stockholm bourse since the market opened in 1863, shareholders fought back ...

Thousands of members of the Swedish Shareholders' Association, which represents smaller investors, gave the group permission to try to stop the sale by influencing board members and larger investors.

About 43 percent of the shareholders' association's members regard Gardell as a corporate raider and a danger to Swedish industry, according to an Internet poll conducted in February and March by the association.

In the Anglo-Saxon world, the phrase "shareholder value" means nothing more than "maximizing the market value of the shares." In Sweden, by contrast, shareholders can be actively opposed to such moves. If they gain money but in the process the country loses a major company, they might well be very unhappy.


Gardell is proof that such attitudes can and will be arbitraged, which in its own way is quite sad. If everybody in Sweden is quite happy with Skandia trading at a discount to what the company could fetch in a sale, that's an entirely viable state of affairs which can last indefinitely -- until someone like Gardell comes along, forces himself onto the board, and agitates for just such a sale. Persson is right that Gardell is destroying the distinctively Swedish capitalist structures: that's not just political rhetoric. Gardell's investors might like the results, but it's understandable that Swedes more generally don't.

(HT: Manham)

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