Aug. 19 (Bloomberg) -- The investor whom Swedish newspapers call ``the butcher'' and former Prime Minister Goran Persson says is destroying the fabric of his nation's capitalism works out of an 1881 stone townhouse in a tree-lined street in Stockholm.

Cevian Capital AB co-founder Christer Gardell, whose office overlooks Humlegarden Park, where kings once grew their hops for beer, says he's a long-term investor trying to increase the value of companies.

Like activist investors in the U.S. and U.K., he buys enough shares of a company to gain seats on the board and then pushes for changes, such as firing directors, shedding assets and installing new managers. Gardell, 47, says his location far north in Europe gives him an edge.

``The advantage we have in Stockholm is that we've been away from the London noise, where all these investors and hedge funds are talking and end up with the same ideas and the same portfolios,'' says Gardell, wearing a single-breasted blazer, spectacles and beige slacks. ``In Stockholm, there is no one to talk to.''

Gardell and Cevian co-founder Lars Forberg, backed by a staff of 20, decide which companies to invest in. They typically purchase 1-5 percent of a corporation's stock. If they can't win seats on the board, they'll try to get onto the directors' nomination committee, which in Sweden consists of shareholders.

Four months after Gardell joined the nomination committee of TeliaSonera AB, Sweden's largest telephone company, Cevian, which held just 1.5 percent of the company's shares, convinced shareholders to oust half of the eight-member board.

Volvo AB

Forberg now sits on the body that nominates the board at Sweden's Volvo AB, the world's second-largest truckmaker.

The investing duo is now looking beyond Sweden. Last December, the pair bought a 3 percent stake in Germany's Munich Re, the world's biggest reinsurer.

``Gardell is a high-performing and competitive person with a killer instinct,'' says Mats Qviberg, the Swedish banker who hired Gardell to run his investment firm Custos AB in 1996.

Some say Gardell is just a company killer. The Swedish media has called him ``the corporate pirate'' and ``the bad boy of Stureplan,'' after Stockholm's financial district.

His decisions to sell Stockholm-based insurer Skandia AB, fire board members at TeliaSonera and call for the sale of divisions at Volvo have angered shareholders, prime ministers and mayors.

Swedish media have branded Gardell ``Sweden's Gordon Gekko'' after actor Michael Douglas's character in the 1987 movie ``Wall Street,'' which features an unscrupulous corporate raider.

Stirring Up Controversy

Gardell and Forberg, 42, have stirred up controversy in Sweden, a society built on consensus and compromise in which public criticism of company executives is rare.

Former Social Democrat Prime Minister Persson, who led Sweden from 1996 to 2006, says Gardell is more interested in making a quick buck than in ensuring the targeted companies' survival and safeguarding Swedish jobs. Persson's party has ruled the Nordic state for 65 of the past 76 years.

``I am very skeptical in regards to these venture investors' way of breaking up companies,'' Persson told Swedish television during the national election campaign, which the Social Democrats lost in September 2006. ``It is they who will destroy the national capitalist structures.''

Gardell and Forberg typically take three to five years to try to increase shareholder value before selling their shares. Since the pair started Cevian in 2002, their assets have grown to 3.5 billion euros ($5.2 billion), and they have posted an average annual return of almost 50 percent, Forberg says.

Carl Icahn

Cevian joined forces with Carl Icahn, one of the world's best-known activist investors, in campaigns to sell Skandia and to break up Helsinki-based Metso Oyj, the world's largest maker of rock crushers and paper machines.

Gardell says he first pitched Icahn on investment opportunities in Sweden when they met in New York in 1998. Over a five-decade career, Icahn, 72, has agitated for change at Motorola Inc., Time Warner Inc. and Yahoo! Inc.

Gardell describes the U.S. investor, who didn't respond to requests for comment, as a good friend and occasional tennis partner.

Cevian's activism sometimes flies in the face of traditional Swedish management, in which companies often have a team-oriented structure built on reaching consensus, sometimes after days of discussion.

Criticism of an individual is rare and heated debates at meetings are unusual, says Martin Lindell, a professor at the Swedish School of Economics and Business Administration in Helsinki.

Demanding Change

After buying a stake in Volvo in the autumn of 2006, Gardell demanded a change of top management at a construction equipment unit.

That move drew criticism from shareholder Carl Bennet, a Swedish investor who sits on a number of boards and is the chairman of Getinge AB, the world's largest maker of surgical workstations.

Gardell showed bad judgment by criticizing a unit manager at Volvo in the media, Bennet told Swedish business daily ``Dagens Industri'' in February. As a large shareholder, Gardell should have discussed the matter in private with the board and management, Bennet, who declined to comment for this story, told the newspaper.

When Gardell and Forberg called in 2005 for the sale of Skandia, the only company still trading on the Stockholm bourse since the market opened in 1863, shareholders fought back.

Skandia was a ripe target. In the late 1990s and early this decade, the company had become embroiled in embezzlement scandals. Its stock swooned, falling 75 percent from January 2001 to May 2005.

Searching for Suitor

Gardell and Forberg acquired a 3 percent holding of Skandia in late 2004. Gardell then took a seat on the company's board. From there, backed by Icahn, he searched for a suitor for Skandia, which he found in the form of Old Mutual Plc, which made its interest in the insurer known in May 2005.

Old Mutual shares had dropped more than 20 percent from January 2001 to May 2005, partly on investor concerns the company was too reliant on the South African market, where it made three-quarters of its profit at the time.

Thousands of members of the Swedish Shareholders' Association, which represents smaller investors, gave the group permission to try to stop the sale by influencing board members and larger investors. It failed to muster enough support to stop the sale.

`No Credibility'

Old Mutual bought Skandia for 56 billion kronor ($9 billion) in February 2006, doubling the value of Cevian's stake, Gardell says, without giving exact share numbers. He sold all of his stock in the newly combined company.

``Gardell said at the time he was a long-term investor because he now held Old Mutual shares, but what really made me understand what kind of person he is was when he then sold them a few weeks later,'' says Gunnar Ek, a corporate adviser at the shareholders' association, which received a record 25,000 proxies from members to try to stop the takeover.

``There is nothing long term in that man,'' Ek says. ``He has no credibility in that respect.''

Jim Sutcliffe, chief executive officer of London-based insurer Old Mutual, says Gardell's strategy wouldn't be controversial elsewhere.

`Slow and Thoughful'

``To call him a butcher is frankly silly; he never came to us and told us to fire people and you'll make a lot more money, or any silly things like that,'' Sutcliffe says. ``In the U.S., Gardell would probably be seen as rather slow and thoughtful, because he is by no way an extreme of the private equity range of people.''

About 43 percent of the shareholders' association's members regard Gardell as a corporate raider and a danger to Swedish industry, according to an Internet poll conducted in February and March by the association.

The survey found that 36 percent see him as a hero, because he puts pressure on companies to increase shareholder value.

As Cevian looks to expand in Europe, its first port of call is Germany, where the unwinding of cross-shareholdings among the country's leading companies has created opportunities for outside investors.

Deutsche Bank AG and insurer Allianz SE have held shares in almost every large German corporation since World War II, as well as in each other. That means they exert influence over large parts of the economy and over businesses that are unrelated to their main missions.

Eliminating Shareholder Pressure

``Cross-shareholdings eliminate the shareholder pressure and result in passive boards and CEOs who are running everything,'' Gardell says. ``After you eliminate this, shareholders start to show up and put pressure on the boards, which become more active and take more responsibility.''

Since Cevian bought a 3 percent stake in Munich Re last December, Gardell says, he has met with top management to push for unspecified changes.

``We welcome all interest in our shares,'' says Munich Re spokesman Michael Able, who describes the talks with Cevian as amiable. ``We've known Cevian for a long time and speak with them as well as all other investors regularly.''

Cevian's dealings with formerly state-owned telephone company TeliaSonera have been less friendly. When Gardell bought a 1.5 percent stake in August 2006, the company's shares had lost half their value since the government privatized it in 2000.

Two months later, the investor worked his way onto TeliaSonera's nomination committee. That same month, TeliaSonera doubled its bonus dividend to shareholders for 2006 to 20 billion kronor.

Ousting Directors

Within weeks, Gardell called for a majority of the board to be ousted. In January 2007, shareholders voted in favor of a proposal by Gardell and the committee to cut the board to seven from eight.

They kicked out five of the old members, including Bennet, the same investor Gardell battled at Volvo. The new board ousted CEO Anders Igel in June 2007. His replacement, Lars Nyberg, has announced 2,900 job cuts since he took over the position in September 2007.

TeliaSonera's trade unions have been less than pleased with the payouts, the ouster of Igel and the job cuts. The company should have invested in new technology and acquisitions, says Berith Westman, a union representative on TeliaSonera's board.

`It is Very Bad'

``We absolutely don't like this -- it is very bad -- as it is harmful when risk capitalists who only see large payouts and not investments in the company come in,'' Westman says.

Gardell says TeliaSonera will definitely be taken over by another provider as industry consolidation gains pace, while the Swedish government prepares to sell its stake in the company. He's pushing for a merger between TeliaSonera and Telenor ASA, Norway's largest telephone company.

``This will be the first step toward a more global consolidation,'' he says.

TeliaSonera stock gained about 32 percent from August 2006, when Cevian first invested in the company, to Aug. 15 this year. In late June, France Telecom SA scrapped a bid to acquire TeliaSonera, after failing to agree on a price.

Cevian's stake, which was 1.6 percent at the end of June, was valued at 3.27 billion kronor on Aug. 10.

Twin Brother

Gardell, who was born in Nacka, a suburb south of Stockholm, isn't the only activist investor in his family. His mother worked part-time in a clothing store while his father was a graphic artist at a bookbinder.

Christer and his twin brother, Rickard, attended the Stockholm School of Economics from 1981 to 1984. Gardell, who did one of those years at the London Business School, earned a Master of Science in Economics and Business Administration.

Rickard moved to Australia in 1987, where he runs buyout firm Pacific Equity Partners. The firm invests in companies in Australia and New Zealand with a value of at least 300 million Australian dollars ($267 million).

``It is probably not pure chance that we ended up in the same field,'' Rickard Gardell says in Sydney, where Pacific is based. ``As twins, it is quite likely that you do the same thing. We were always together, went to the same class and did all sports together.''

Seaside Suburb

The brothers don't compete in any deals, he says. Christer Gardell worked at New York-based consulting firm McKinsey & Co. in Stockholm, after graduating from the Stockholm School of Economics in 1984. In 1994, he went to Nordic Capital, a private equity firm.

The Cevian co-founder lives with his wife, Kristina, and their three daughters in a white wooden house in Saltsjobaden, a seaside suburb outside Stockholm that was developed by Sweden's Wallenberg dynasty in the 19th century.

A black Porsche Carrera is among the cars parked outside the house, located in a part of the village known as the Sunny Side.

Home prices in Saltsjobaden are among the highest in Sweden, with offers for a seven-room, villa overlooking the Baltic Sea starting at 12.1 million kronor. Gardell says he likes to ski alone and play tennis every day.

The swedish investor owes his first break in business to a spilled cup of coffee. Gardell was on a jet in northern Sweden, flying back to Stockholm after Christmas in 1995, when a flight attendant dropped a suitcase on a passenger across the aisle.

Not Lucky Day

When she later splashed a cup of hot coffee over the same man's shirt, Gardell leaned over and told him this clearly wasn't his lucky day. The man was Qviberg, founder of Swedish investment bank HQ AB and one of the country's most influential bankers.

The two began talking, and Qviberg says he was impressed by Gardell's personality and ambition. He asked him to run Custos, the Swedish investment firm Qviberg acquired in 1995 and where Gardell developed his activist investment strategies.

Gardell and Forberg, whom Gardell had hired to be chief investment officer at Custos, broke away to start their own firm in 2001.

They initially called their new company Amaranth, who was a hunter in Greek mythology loved by Artemis, the goddess of forests and fertility.

Selling a Name

When Gardell and Forberg realized there was already a hedge fund in the U.S. with the same moniker, they agreed to sell the European rights to the name for 1 million euros.

Six months later, Greenwich, Connecticut-based Amaranth Advisors LLC went bust after $6.6 billion of losses following wrong-way bets on natural gas before the firm collapsed in September 2006.

The name Cevian, suggested by a staff member, comes from a mathematical term for a line connecting the vertex of a triangle to its opposite side.

It took time for Cevian to win over clients, Forberg says. ``Our way of doing business, active ownership in publicly traded companies, was very new, and when we preached for potential investors, it was a big challenge to make them understand how the business model works and why it would be successful,'' he says.

In its quiet corner of Europe, far removed from most fund managers, Cevian has earned the acclaim of investors and the enmity of managers, politicians and labor unions.

As the firm pushes into Germany and beyond, Gardell says there's still plenty of shaking up to be done in Sweden Inc.

To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net

Last Updated: August 18, 2008 18:00 EDT