Nokia for sale

During an eventful 1991, there was yet another drama, but it attracted no public attention. This was when Ericsson was negotiating to acquire Nokia.

Nokia’s expansive plans during the 1980s nearly ruined the company. The world learned in December 1988 that the head of the group, Kari Kairamo, had committed suicide. This naturally gave rise to many questions, because to external observers Nokia’s operations did not seem to be doing badly.

Lars Ramqvist says discussions about Ericsson’s acquisition of Nokia began in 1989. “We took a strategic view of the question. One problem we identified was that it would be difficult to close down Nokia’s radio and television operations in Germany. We had been in the same business ourselves and knew how hard it was.”

In early 1991, one of Ericsson’s owners was asked informally if there was any interest in buying Kansallisbanken’s shares in Nokia, which would have led to a share of 20–25 per cent. The major shareholders in Nokia at the time were Finland’s two leading commercial banks, Föreningsbanken (not to be confused with Föreningsbanken in Sweden) and Kansallisbanken with associated companies.

The question attracted growing attention; the chairman of the Ericsson board, Björn Svedberg, raised the issue of ownership with Casimir Ehrnrooth, a member of Nokia’s board from 1989 to 1999. Föreningsbanken and Kansallisbanken probed the possibilities of joint action. During the spring and early summer of 1991, Ericsson CEO Ramqvist, CFO C.W. Ros, and planning director Bo Landin were also involved in the discussions.


Kansallisbanken was represented by Peter Fagernäs, Föreningsbanken by Björn Wahlroos, each a deputy CEO. Another major shareholder in Nokia, Pohjola, also took part through its deputy CEO, Pirkko Alitalo. Wahlroos recalls: “There was a lot of talk in different contexts about who would buy whose shares … a great deal of hot air.”

In September 1991, the negotiations moved up a level, with a meeting at Arlanda, Stockholm’s airport, attended by Svedberg, Ramqvist and Ros from Ericsson, with the Finnish owners represented by Ehrnrooth, Wahlroos and Ahti Hirvonen, head of the group linked to Föreningsbanken and a member of Nokia’s board.

Wahlroos recounts: “The idea was that Ericsson was to take over the whole of Nokia by acquiring the shares held by Föreningsbanken, Kansallisbanken and Pohjola, and making an offer for the rest. The negotiations were pretty intensive even though the issue was really quite a simple one. What we had to sell were our shares in Nokia – but Ericsson did not want the whole of Nokia and wanted to exclude the consumer electronics side from the deal. Our approach was that it was a question of all or nothing. As shareholders, we could not go in and take operational action in the company. We offered the shares at a reasonable price, FIM 140 for an ordinary share, which was 40–50 percent over the listed price at the time.”

Wahlroos and Fagernäs met Alitalo at Pohjola on October 10 for a telephone conference with Ericsson’s representatives. According to Nokia’s official historian Martti Häikiö, Ros then announced that the final decision of Ericsson’s board was to accept the price of FIM 140 per share but that the consumer electronics side was not to form part of the acquisition: this was something the vendors would have to take care of. The Finns responded “we are not industrialists” and that they could not accept the offer, upon which Ros stated that this meant the negotiations had come to an end.


Author: Svenolof Karlsson & Anders Lugn

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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