'No concrete proposition' from U.S. to back Huawei rival Ericsson - Swedish minister (updated)
07/02/2020 09:45
* Attorney general says U.S. should consider buying stakes
* 'No concrete offer' from U.S. for Ericsson - Swedish
minister
* Move would be to counter Huawei 5G dominance
* Ericsson shareholder urges co to explore interest
* Ericsson, Nokia shares rise more than 4%
(Adds Swedish minister comment, updates shares)
By Johannes Hellstrom and Simon Johnson
STOCKHOLM, Feb 7 (Reuters) - Sweden's digital minister
stressed Ericsson's ERICb.ST importance for jobs and
technology in Europe on Friday after a U.S. official suggested
the United States buy stakes in the telecoms gear maker or
Finland's Nokia NOKIA.HE to counter Huawei's dominance in 5G.
U.S. Attorney General William Barr said in a speech on
Thursday that the United States and its allies should consider
the highly unusual step of taking a "controlling stake" in one
or both of the Nordic rivals to China-based Huawei. urn:newsml:reuters.com:*:nL1N2A60AT
5G networks are at the centre of a dispute over technology
between the United States and China as they are expected to host
a range of critical functions from driverless vehicles to smart
electric grids and military communications, underscoring their
importance to national security.
The United States has blacklisted Huawei and is in the midst
of a worldwide campaign to convince allies to ban the Chinese
giant from their 5G networks, alleging its equipment could be
used by Beijing for spying - which Huawei denies.
Barr's comments helped lift shares in the Nordic companies,
with Ericsson gaining 4% and Nokia 6% by 1344 GMT.
Sweden's Minister for Energy and Digital Development Anders
Ygeman said potential U.S. interest in Ericsson made sense,
given that no U.S. company offers a full suite of 5G products,
but he stressed the company's importance for Swedish business.
"At the same time there is no concrete proposition from
America and if there were such a proposal it would be up to
Ericsson shareholders to respond to that," he told Reuters.
"Clearly there is both a strong Swedish and European
interest in being able to continue to lead technological
development. Ericsson is important both for jobs and business in
Sweden but also as a technology leader."
U.S. government investments in public companies are rare
except in bailouts to save ailing firms and jobs, and even more
so concerning foreign companies.
The two firms have a combined market capitalisation of about
$50 billion and it is unclear how the U.S. government would fund
investment in the companies or indeed how European regulators
and governments would view such a move.
HIGHEST PRIORITY
While the two companies, which together with Huawei dominate
the market, declined to comment on Barr's remarks, Ericsson
shareholder, activist fund Cevian Capital, said it welcomed the
apparent U.S. interest and urged executives at the Swedish
company in which it holds an 8.4% stake to explore the potential
opportunity.
"A U.S. interest in Ericsson is clearly positive for Sweden,
the company and the shareholders," Cevian Capital managing
partner Christer Gardell told Reuters in emailed comments.
"A potential deal would have to be based on a completely
different valuation level than today's ridiculous share price
for Ericsson," Gardell added. "The board and management need to
drive and handle this question with the highest priority."
At the World Economic Forum in Davos in January, U.S.
President Donald Trump had a dinner with executives from 25
multinational companies and organizations https://bit.ly/2UEUtmi,
including the CEOs of Ericsson and Nokia, with talks touching
on issues such as the 5G networks rollouts in the United States.
urn:newsml:reuters.com:*:nL1N29Q13X
The head of Sweden's shareholders' association,
Aktiespararna, said there were likely to be simpler and cheaper
ways for the United States to tap into Ericsson's expertise and
questioned the wisdom of making clear its interest.
"If the interest in Ericsson is serious it is not the best
strategy to spread rumours about it and in that way raise the
price of the share, making the company more expensive,"
Aktiespararna CEO Joacim Olsson said.
Investment firm Investor AB INVEb.ST , the biggest owner by
voting rights in Ericsson, declined to comment, as did the
second-biggest owner by votes, Industrivarden INDUa.ST .
Barr said in his speech at a conference on Chinese economic
espionage that a move to secure a controlling interest in
Huawei's main rivals could take place "either directly or
through a consortium of private American and allied companies".
Over the past decade, speculation has circulated among
investors and media concerning potential interest from U.S.
technology giant Cisco's CSCO.O in a tie-up with Ericsson,
although a concrete offer has never materialised.
President Donald Trump signed an executive order last year
barring U.S. companies from using telecommunications equipment
made by companies posing a national security risk and he has
pressed nations not to grant Huawei access to 5G networks.
Britain in late January still granted Huawei a limited role
in the country's 5G mobile network, and the EU followed its
example by allowing members to decide what part Huawei can play
in its 5G networks. urn:newsml:reuters.com:*:nL8N29X252 urn:newsml:reuters.com:*:nL8N29Y3L0
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
BREAKINGVIEWS-Uncle Sam’s 5G telecom fantasy is M&A nightmare
urn:newsml:reuters.com:*:nL8N2A72A8
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Johannes Hellstrom; additional reporting by Anna
Ringstrom and Simon Johnson in Stockholm, and Mark Hosenball and
David Brunnstrom in Washington DC; writing by Niklas Pollard;
editing by David Evans and Louise Heavens)
((johannes.hellstrom@thomsonreuters.com; +46850242388; Reuters
Messaging: johannes.hellstrom.reuters.com@reuters.net))