International Business: SWEDEN
THE WALLENBERGS HARNESS A DYNAMO
Does Barnevik's appointment signal a shakeup in the empire?
Peter Wallenberg, Sweden's most powerful industrialist, sometimes comes across as a rumpled, bumbling figure, but he has proved a shrewd steward of his family's business empire. This month, he took one of his boldest steps yet by announcing that Sweden's best-known chief executive, Percy Barnevik, will succeed him on Apr. 14 as chairman of Investor, the family company that holds major stakes in companies worth close to $100 billion.
Turning over the most prestigious job in Swedish business to a non-family member was probably a tough decision for Wallenberg, 70. But Wallenberg thinks Investor has to prospect for opportunities outside the small Swedish market in order to thrive in the next century. The 56-year-old Barnevik, who has gained a stellar international reputation at ABB Asea Brown Boveri Ltd., seemed the best choice to preside over such a push. "There is no one better than Percy to be instrumental in that, because of his tremendous international network," says Claes Dahlback, Investor's president.
Barnevik's appointment is part of what could be a major shakeup in the Wallenberg empire. While Dahlback, 49, says he will remain as day-to-day manager of Investor for at least a year, he is shifting some of his energy to struggling S.E. Banken. The bank, Sweden's third largest, is badly lagging on the retail side. Dahlback is expected to become deputy chairman and act as a mentor to Peter Wallenberg's son, Jacob, 41, who will soon become the bank's chief executive. The Wallenbergs are increasing their stake in the bank and may turn it into an asset management vehicle. The new team may also revive merger talks with Sweden's No.2 bank, Nordbanken.
When Dahlback does eventually leave Investor, he will likely be succeeded by Jacob's cousin, Marcus. "The boys," as the two cousins are known, are supposed to eventually run the empire between them. But overshadowed by Peter Wallenberg and press-shy, they have been slow to emerge into the limelight. Some sources say they seem destined to function more as owners than hands-on executives.
Investor was on the move even before the recent announcements. Last year, through an affiliate, it completed the acquisition of Gambro, a world-class Swedish kidney dialysis specialist, for $1.3 billion. It has been staffing up investment offices in New York, London, and Hong Kong to scout for opportunities. So far, Investor has plunked down only about $100 million into U.S. high-tech ventures, but with Barnevik on board, the pace is likely to accelerate--though not recklessly. Investor has about $1.3 billion in cash to put to work from its flotation of truckmaker Scania last year.
THORNY ISSUE. One big question is how Barnevik, who declined to be interviewed, will fit into Investor's cozy culture. He could be a thorn in the side of the young Wallenbergs if they prove to be weak managers. He made his reputation through the 1987 megamerger of Sweden's Asea with the Swiss-German BBC Brown Boveri Ltd. and the brutal restructuring that followed. Investor operates quietly and for years has kept alive such marginal players as the Saab aircraft and car operations. Nevertheless, it has been bringing in annual returns in the 20% range, thanks to strong performances by the likes of pharmaceuticals maker Astra and telecom giant Ericsson.
It seems probable that Barnevik will live in London and leave detailed management to others, but outside investors hope he will nevertheless crack the whip on Wallenberg executives and try to cut Investor's dependence on cyclical, low-growth operations such as Saab autos, appliance maker Electrolux, and Stora, a forest-products company. There is also a strong argument that drug-maker Astra, though a stellar performer, is too small to make it in the long run and should be merged. In five years, Investor "is not going to be in the auto business and not as involved in forest-products and white goods," predicts Rob L. Friedman, senior vice-president of Short Hills, N.J.-based Franklin Mutual Advisers, which owns about 7% of Investor. That would probably be Barnevik's inclination and with Peter Wallenberg's exit it may very well happen.By Stanley Reed in London, with Ariane Sains in Stockholm