SCA stake sale in owner may herald the unwinding of cross-holdings (updated)

L E Lundbergforetagen AB (publ)

03/11/2015 14:55

* SCA sells stake in biggest owner, Industrivarden 
    * Move may herald stake sales by Handelsbanken 
    * Handelsbanken owns stakes in Industrivarden, SCA 
 
 (Adds banker and investor comment, background) 
    By Sven Nordenstam 
    STOCKHOLM, Nov 3 (Reuters) - Hygiene products maker SCA 
 SCAb.ST  has sold its stake in its biggest owner, 
Industrivarden, in what may herald a dismantling of the 
cross-holdings that concentrated power on a small group of 
businessmen tied to one of Sweden's top investment companies. 
    The move follows a power struggle at Industrivarden in the 
wake of a spending scandal at SCA, which saw Swedish real estate 
magnate Fredrik Lundberg take over as chairman at the investment 
firm. 
    The cross-holdings between some of Industrivarden's 
 INDUa.ST  companies, which include Handelsbanken  SHBa.ST , 
Volvo  VOLVb.ST  and Ericsson  ERICb.ST , have been criticised 
by Swedish pension funds for creating an opaque structure that 
limited outside influence. 
    "I believe there is a rather strong signal in this 
happening," said a senior banker, who has done business with 
Industrivarden companies. 
    "There may very well be changes to the ownership positions 
of Handelsbanken," the banker added, declining to be named. 
    Handelsbanken is the third-largest shareholder of 
Industrivarden, with a 6.8 percent stake. The investment group 
is in turn the bank's second-largest shareholder. Handelsbanken 
is also the second-biggest SCA shareholder, with a stake of 2.9 
percent. 
    Lundberg's revamp of the Industrivarden group should lead to 
increasingly dynamic governance approach, with more diverse 
boards and management as more people become involved in 
selecting them, the banker said. 
    Since Lundberg took control, Industrivarden and its firms 
have begun looking outside their own ranks for new managers.  
    In August, engineering firm Sandvik  SAND.ST  picked Bjorn 
Rosengren as CEO, a former top chief at companies where the 
Wallenberg family's investment vehicle Investor AB  INVEb.ST , 
has large stakes. 
    The same month, Industrivarden picked its first female CEO, 
private equity executive Helena Stjernholm. 
    SCA said in a statement on Tuesday it had sold its 2.8 
percent Industrivarden holding to Swedish institutions and 
investors for 169 crowns per share, equalling 2 billion crowns 
($234 million). 
    "We have had these shares for quite some time and we thought 
this was a suitable time to sell them," SCA CEO Magnus Groth 
told Reuters.  
    However, SCA's pension funds retain their ownership in 
Industrivarden, representing a total of 7.9 percent of its 
shares. 
    "In general we see it as positive when there isn't 
cross-ownership," said Ossian Ekdahl, head of communications and 
environmental, social and governance issues at Sweden's First 
National Pension Fund, which owns 0.9 percent of SCA shares. 
    Lundberg's holding company, Lundbergforetagen  LUNDb.ST , 
said separately it had purchased 5 million Industrivarden 
shares. 
($1 = 8.5311 Swedish crowns) 
 
 (Additional reporting by Anna Ringstrom and Johan Ahlander; 
editing by Niklas Pollard and Louise Heavens) 
 ((anna.ringstrom@thomsonreuters.com; +46 8 700 1134; Reuters 
Messaging: 
anna.ringstrom.thomsonreuters.com@thomsonreuters.net)) 
 
Keywords: CELLULOSA SCA EQUITY/INDUSTRIVARDEN