Too great a risk
Wahlroos says: “The meeting began at 9.30am Finnish time. C.W. Ros announced that Ericsson’s board had discussed the issue and had said no to our proposal. Consumer electronics involved too great a risk. Peter [Fagernäs] went white in the face; this was bad news for him. At Föreningsbanken, we could take it more philosophically. We told Ericsson we would get back to them.”
They never did. In December 1991, Föreningsbanken bought the Nokia shares held by Kansallisbanken. When the financial crisis became even worse, Föreningsbanken bought its competitor outright.
The economy rocked Nordic computer companies too. Nokia Data (previously Ericsson Information Systems) was sold to ICL in September 1991. Nokia, Norsk Data and Nixdorf were all unable to cope with the competition from American PC manufacturers.
In January 1992, Jorma Ollila took over as head of Nokia.
Two American investment banks, Morgan Stanley and Goldman Sachs, spent six months working to arrange the potential acquisition, according to Åsgård & Ellgren.
“The attempt to sell Nokia to Ericsson was a fairly major secret in Finland up until the end of the 1990s,” says Wahlroos, a member of Nokia’s board until he founded his own bank, Mandatum, in the autumn of 1992. Martti Häikiö adds that the events had a traumatic effect on the Nokia management.
Like many others who commented on the deal, he believes that it was good for both companies that it came to nothing. A single Nordic telecommunications company instead of two would have meant less competition and less momentum.
ERICSSON’S VIEW OF NOKIA
In 2009, Peter Wallenberg, a veteran executive with Investor, one of Ericsson’s two major shareholders, made these comments on the proposed deal:
“The question was raised within the board but we did not go ahead. In our view, Nokia was a relatively small company in telecommunications. It was mainly known for manufacturing rubber goods and components … a sort of Finnish Trelleborg. They owned a television factory in Motala [purchased in 1984 when it produced the classic Swedish Luxor television sets]. We did not want to be saddled with the factory, which we considered would be a burden.”
In 2008, Svedberg said of the Nokia affair: “We were following developments in Finland closely. There were many smaller companies in the telecom sector we would have been able to buy. Earlier we had turned down an offer to acquire Televa, the state-owned company bought by Nokia. And Nokia then was not the Nokia it would become later; this was before the boom in GSM phones. And where exchanges were concerned, Nokia was insignificant compared to us.”
“Of course as chairman of the board I had my own ideas. I thought it could be difficult to run Nokia with a Swedish owner. The strategy that could have been adopted would have been to let Nokia take care of mobiles while we kept the system technology in Sweden,” Svedberg says.
Even afterwards Svedberg continued to think about the relationship with Nokia. Ramqvist and Ollila covertly maintained contact with each other. One topic of discussion was whether there was anything to be gained from some form of merger. Svedberg says: “I could see that Nokia had a lot going for it. In so far as collaboration involved technology, it would be easier to work with Nokia than anyone else in the industry. They were tough negotiators but we could always rely on each other.”
Author: Svenolof Karlsson & Anders Lugn