Volvo Said Ready to Name BP’s Svanberg as Chairman Next Week
Volvo is ready to make an announcement as soon as Dec. 12, the person said, declining to be identified before an official statement is issued. Svanberg would replace Louis Schweitzer, who will turn 70 next year.
BP, where Svanberg has been chairman since January 2010, said earlier this week it would be happy for Svanberg to serve at both companies. The appointment at Gothenburg-based Volvo would mark a return to Sweden for Svanberg, a Swedish national and the former chief executive officer of Ericsson AB.
“There’s been some debate amongst BP shareholders about whether they’re happy with this,” said Colin McLean, chief executive officer of SVM Asset Management Ltd. in Edinburgh, which has about 700 million pounds ($1 billion) of assets under management including BP shares. “I don’t think there will be immediate pressure on him to leave BP, but the role probably does need someone with more specific industry experience.”
Volvo spokesman Marten Wikforss declined to comment. A BP spokesman also declined to comment.
Svanberg, contracted to work at BP three days a week, attracted criticism in the U.S. after the Gulf of Mexico oil spill last year that cost CEO Tony Hayward his job. After a meeting with President Barack Obama at the White House, he said BP cares about the “little people” affected by the disaster.
The trial that will determine BP’s liability in the spill starts on Feb. 27 in New Orleans.
“As shareholders, we would be concerned about BP’s chair taking on another chairmanship role,” said Julie Tanner, director of socially responsible investing for New York-based Christian Brothers Investment Services Inc., in an e-mailed response to questions. “There is a substantial amount of work ahead for the chair of BP that requires his undivided attention.”
Swedish newspaper Svenska Dagbladet reported last week that Svanberg was in the running to become Volvo chairman after an agreement between the truckmaker’s two largest shareholders, Renault SA and investment fund Industrivarden AB. (INDUA)
At Volvo, Svanberg would oversee CEO Olof Persson’s push to increase profitability. Volvo had an operating margin last year of 6.9 percent of sales, compared with 19 percent for Scania AB, the truckmaker with the industry’s highest margins, Bloomberg data shows.
“When Carl-Henric Svanberg is in the company, one of the major challenges for them will be to be as strong in a market downturn as their rivals,” said Morten Imsgard, an analyst at Sydbank A/S in Aabenraa, Denmark, with an “overweight” rating on Volvo’s shares.
BP has added four people to its board since the Gulf of Mexico spill last year. Brian Gilvary will become the fifth new member when he becomes chief financial officer on Jan. 1.
“Svanberg has to stay on for now, you can’t create a vacuum,” said Christine Tiscareno, an equity analyst at Standard & Poor’s in London. “But eventually, in a year or so, he may go because people didn’t like him and I don’t think he was particularly happy here, either. If he leaves, I don’t think it will be a negative or disruptive.”
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