Speculation over Hexagon

Hexagon yesterday commented the news that it is in early-stage talk with rivals on a potential sale (see SPR 14/6 Early Ed.), saying that it had “noted the recent speculation in media regarding a potential acquisition of the company. Hexagon regularly evaluates various opportunities to optimise the company’s positioning and shareholder value. Should these evaluations lead to concrete results, the market will be immediately informed”.

One analyst tells DI that this is nothing less than an invitation to other parties. “They’re talking to someone and want other interested parties to be aware of this.”

According to the Financial Times, Hexagon has been working with Goldman Sachs and HSBC to gauge interest from rivals such as ABB, Schneider Electric, Siemens and GE.

Daniel Djurberg, Handelsbanken analyst, believes Hexagon’s IES would suit ABB Robotics, but leans towards an American conglomerate such as Honeywell, while SEB’s Daniel Schmidt believes GE and Siemens are likely candidates.

Johansson could face vote of no confidence

Sweden’s much-criticised Public Employment Service (Arbetsförmedlingen) plans to split into three, providing a job matching service, and two centres, one for employers and one for job seekers. The agency describes the reorganisation as a “quantum leap” but does not intend to cut its 14,700-strong workforce.

The board has already approved a change in IT service management, and will decide on the other changes in the autumn.

Employment Minister Ylva Johansson does not wish to be interviewed, but suppliers are critical, with one saying that the proposal shows the agency is out of touch with reality.

Elisabeth Svantesson, the Moderates’ labour market policy spokesperson, slates the agency’s timing, given that a majority in Parliament want to close the Employment Service. Johansson is taking a risk by defying the wishes of the Riksdag and not ordering an inquiry into its possible closure and could face a vote of no confidence, according to Svantesson.

 

Time for reflection

Sterling suffered a steep fall on Friday after the shock election result in the UK, wallowing at 1.2735 against the dollar and 0.8783 against the euro.

The weakness of the pound is negative for Swedish export firms as well as for those in the UK importing components to their end products, comments Ulla Nilsson, head of the Swedish Chamber of Commerce in London.

Kitchen company Nobia, which is exposed to the UK market and saw its share price fall by 2.6% on Friday, is already feeling the effects, while construction firm Skanska says it is not greatly affected since it has its revenues and expenses in the same currency.

Claes Jacobsson, head of Scania UK, argues that the outcome of the election will allow time for reflection. “A hard Brexit is not what companies and industry want; it creates too much uncertainty,” he says.

Finance Minister Magdalena Andersson is cautiously optimistic, saying, “If the outcome is that the British want a close relationship to us after they have left the EU then that is good.”

Gardell paves way for power shift

The news that Cevian Capital has bought more than 5% of the capital in Ericsson is just further proof that Investor and Industrivärden have failed to control the telecom giant, suggests Dagens Industri. Well-run companies with an efficient structure and a competent board of directors do not receive visits from activists. No activist would dream of buying a share of Atlas Copco, or any other company in the Douglas sphere, continues the business daily.

It is quite feasible that Christer Gardell’s Cevian Capital will call for the elimination of different voting rights, which would raise the value of the company. If Christer Gardell chooses to pursue the matter, it is reasonable to assume that he will receive the backing of Industrivärden and institutional owners, thereby paving the way for a shift of power.

Tense wait for report

With France and Germany pushing for closer cooperation, the European Commission has outlined five scenarios for the future of the EU post-Brexit. Sweden has remained remarkably quiet about the white paper, but at lunchtime today the Commission is to release a report that has the potential to change this.

According a rumour in the German media last week, pressure will be put on Sweden to adopt the euro no later than 2025. The European Commission has denied that this is the case, but Roberg Bergqvist, chief economist at SEB, believes there is a grain of truth in the rumour.

Finance Minister Magdalena Andersson (S) is defiant, saying she will not accept a specific date. “It is up to the people of Sweden … to decide if and when Sweden adopts the euro. There is no other alternative,” remarks the minister, believing that there is understanding in the EU for this stance post-Brexit.

Digitalisation challenging postal services

Much remains to be done before PostNord can win back public trust, says Enterprise Minister Mikael Damberg (S) in a comment to a fresh report on postal services in Sweden.

The Swedish Post and Telecom Authority (PTS) has found that the number of complaints against PostNord and Bring Citymail has decreased since last year, but is still too high.

In the case of PostNord one of the problems is that the company has reduced the number of employees in a cost-cutting campaign, as more letters are sorted by machine. Longer postal rounds and the company organisation are also seen as contributory factors to the poor service.

Digitalisation is also challenging the postal services: the number of letters sent in Sweden has fallen since 2000, and PostNord has consequently lost market share. Bring Citymail’s problem is that the company has grown fast and not adapted its organisation to its increase in market share.

Sten Selander of PTS summarises, saying that when the quality of the postal service falls, more people go over to email.

Persson acquires more H&M shares

In the past week Stefan Persson, the chairman of H&M, has purchased shares in the fashion retailer to a value of SKr 2.3 billion. Despite this, the mood on the stock market is sour and H&M shares have tumbled by 32% in the past two years. The reason for the slide is said to be the surge in online sales.

“H&M mainly sells its clothing and accessories in shops, and we are seeing in-store sales drop across Europe due to the increase in online sales,” comments Christopher Lyrhem, SEB share strategist.

Bolund defends tax on chemicals

Sweden’s consumer electronics industry is in uproar over the news that the tax on chemicals, which will take effect on 1 July 2017, will only be levied on Swedish firms. Foreign online vendors selling goods to Swedish consumers will not be liable to the tax.

The Swedish trade association Elektronikbranschen is concerned over the amount of administration the tax will require, as well as the extra cost to consumers, saying the tax will distort the market.

Nevertheless, Financial Markets Minister Per Bolund (Green) defends the tax, saying if is “a tool to reduce the use of hazardous chemicals”.

Tax on chemicals

Sweden is introducing a new tax on chemicals within certain electronic products that are sold in or brought into Sweden. The tax will take effect on 1 July 2017 and will be levied on a range of white goods and electronic products, including computers and mobile phones. The maximum tax will be SKr 320 per product, and the government expects to collect revenues of some SKr 2 billion annually.

All legal entities bringing such products into Sweden will have to fill in a six-page tax form and pay the tax within 5 days. Large companies will be granted some leeway.

Electrolux, one of the firms affected by the new tax, is less than impressed, saying the legislation is laborious. The Swedish Catering Equipment Manufacturers and Distributors Association is also critical, saying the cost of administrating the tax will be far higher than the revenue the government expects to collect.