State keen to end battle over Aker
April 24, 2009
Even after being publicly ridiculed and harshly criticized by the boss of industrial firm Aker, Norway’s trade and industry minister kept smiling. Sylvia Brustad looked for bright spots in the state’s battle over Aker, said she regrets her own tough language and hopes the conflict can be resolved. Opposition politicians were far from satisfied.
Most players and observers in the battle over Aker claimed that Brustad and other state officials were the only ones who saw anything positive after Aker boss Kjell Inge Røkke’s sensational press conference on Wednesday. Røkke showed little if any sign of capitulation in what’s become one of the most serious conflicts ever over state ownership in private industry.
Røkke all but scoffed at Brustad’s demand that Aker hold a corporate assembly over a board decision to sell five Aker companies to another Aker firm, Aker Solutions, in which the state indirectly owns a 12 percent stake. The disputed sales have resulted in diving share values for Aker Solutions, paper losses for all involved and have seriously damaged relations between Røkke and one of his largest shareholders.
Røkke is largely viewed as having “won” the latest round in the battle over Aker but many believe he also confirmed his reputation for treating fellow shareholders badly. Røkke wants to run Aker his way, commentators claim, and has little regard for other Aker investors.
Meanwhile, opposition politicians were demanding that both Brustad and her predecessor, Dag Terje Andersen, explain themselves and answer questions on the state’s role in the conflict before a parliamentary committee. Many feel the state got in over its head when the Labour-led coalition government agreed to invest with a committed capitalist like Røkke, and that state officials haven’t behaved professionally.
“They’re so blinded by their own rhetoric of preserving jobs and an industrial sector in Norway, that they lost sight of how they should carry out the professional ownership that industry deserves,” editorialized newspaper Dagens Næringsliv .
Brustad told reporters this week that she took Røkke’s verbal fireworks seriously. “When Røkke reacts so strongly to the words I used, I see that my choice of words could have been different,” she said, referring to her claims during the Easter recess that she was “furious, frustrated and irritated” over the way Røkke handled the disputed sales. Røkke imitated Brustad’s dialect in mocking exactly those words at his press conference.
“But the reality is that we think the issue belongs in the corporate assembly and that it was important to get an independent evaluation of the pricing of the companies,” Brustad added.
That’s what’s underway. The state has hired Oslo securities firm Pareto, Aker reportedly has hired UBS of Switzerland and both sides have various legal advisers to help them determine the value of the five companies and options available now. It was unclear when if ever the two sides may come to terms.
Analysts see three possible outcomes: Either Røkke cuts the price Aker Solutions has agreed to pay for the five firms, the sales are nullified and a corporate assembly is called to discuss their potential, or both sides end up in court.
One thing is crystal clear: The market’s assessment of the sales has been devastating. Shares in both Aker and Aker Solutions took a dive after the deals were revealed and investors clearly believe Aker Solutions entered into a bad deal by agreeing to buy the firms from Røkke-controlled Aker. Among the biggest losers so far is Røkke himself, given his majority ownership stakes in the entire group.