Feeds

Ericsson: from A to B and back again

Voting balance of power untouched by shareholding shake-up

  • alert
  • submit to reddit

High performance access to file storage

Ericsson plans to reform its controversial voting structure to allow foreign shareholders a greater say in the company. However, the plan will do little to alter the current balance of power since the two existing controlling shareholders will remain in charge.

Under LM Ericsson Telefon's current dual-class shares system, the "A shares"
carry 1,000 times the voting rights of "B shares". Many Nordic companies have A shares with 10 times the votes of B shares, according to the Financial Times.

Currently, both types of shares entitle their owners to the same share of Ericsson's earnings, but the greater voting rights associated with the A shares means that those groups with a majority of A shares have been able to control the company, despite holding just a tiny share of the company's capital.

This arrangement has antagonized foreign shareholders and indeed, the company's own management. Ericsson itself has 15.3 billion B shares, but only 650 million A shares.

Under the agreed plan, A shareholders will have the right to convert one B share to one A share, for every A share they already hold. Those not wishing to exercise the right are being offered SEK1.1 ($0.15) per share by a group of Swedish institutions. The plan will be presented to Ericsson's annual meeting on 6 April.

The two power blocs that currently control Ericsson are Investor, the holding company of the powerful Wallenberg family, and Industrievaerden, which is owned by the banking giant Handelsbanken. At the moment, these two control 80 per cent of the votes with less than 10 per cent of the capital. After the reform however, they will still remain in control, with 40 per cent of the votes.

That said, Swedish institutions and foreign shareholders will gain greater influence, with the combined voting power of foreign shareholders rising from 2 per cent to approximately 20 per cent.

According to the Financial Times, both the Wallenberg and Handelsbanken power houses are expected to convert their B shares to A shares, demonstrating their determination to retain control of Ericsson. This could anger foreign shareholders and also does very little to alter the balance the power with the company. However, for Ericsson's management, it should help them raise capital in the future.

Source: ComputerWire/Datamonitor

High performance access to file storage

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.