Information on Skanska's settlement proposal concerning Scancem

10/29/1998 12:00 AM CET
Press release

The proposed settlement with the EU Commission concerning Scancem is now likely to be approved. Skanska will be able to use its full voting rights in order to implement the terms of the settlement.

PRESS RELEASE, OCTOBER 29, 1998                           83/98

The proposed settlement with the EU Commission concerning Scancem is now likely to be approved. Skanska will be able to use its full voting rights in order to implement the terms of the settlement.

The settlement negotiated by Skanska with the Commission is equitable and fair to all Scancem shareholders; it provides certainty regarding Scancem's legal status going forward; and Skanska has fairly treated the other major owner Aker and Scancem's management.

An equitable and fair settlement
The Scancem merger was on the verge of being declared illegal when Skanska was able to reach an equitable and fair settlement. Outgoing Scancem CEO Sven Ohlsson and certain members of the Scancem board would have preferred to battle the Commission in an effort to avert the sale of the Finland cement production assets. In order to avoid disposing of these Finland assets that account for less than 8% of Scancem's turnover, Mr. Ohlsson's strategy would have exposed Scancem and its shareholders to the following unacceptable risks:

  • the highly uncertain outcome of a formal Commission proceeding challenging the legality of Scancem;
  • years of legal proceedings and appeals in courts in Luxembourg;
  • the forced divestiture of Scancem's key cement interests in Norway and Sweden and in Scancem International;
  • adverse effects on employment;
  • a material and continuing negative impact on Scancem's commercial interests;
  • further weakening in the Scancem share price;
  • irreparable damage to Scancem staff and employee morale; and,
  • escalating and wasteful legal costs.

Skanska believes that the correct judgment was to avoid those risks, to assure Scancem's future validity as a company, and to protect employment and the share price - and that the sale or transfer of the Finland assets is a fair price to pay for those gains.

Certainty regarding Scancem's legal status
Skanska has received from the Merger Task Force of the Commission a written assurance that approval of the Skanska settlement will remedy the Commission's concerns regarding the 1995 merger transactions, that such approval will obviate the need for any further investigation of the Scancem merger, and that the 1995 case will be closed. Thus, the legal certainty sought for Scancem's future has been achieved. Neither the Commission (with or without formal notification) nor anyone else can foreclose possible third-party actions.

For these reasons, and with this assurance from the Commission, Skanska properly rejected Sven Ohlsson's request that it now provide formal notice of the 1995 merger to the Commission. The Commission has established that nothing will be gained from doing so. Such a procedure would only delay the finalization of the settlement and keep Scancem employees and shareholders at the mercy of continuing uncertainty for several more months.

Skanska has fairly treated Scancem management and Aker
As noted above, the Skanska settlement with the Commission is equitable and fair to all shareholders.

Skanska tried in vain to persuade Scancem management and Aker to negotiate with the Commission. Skanska's ultimate decision to go forward itself with settlement negotiations reflected the conclusion of Skanska's lawyers and management that the Commission's 1995 case posed a serious threat to both Skanska and Scancem. Under these circumstances, Skanska could not responsibly abstain from a settlement that would avert an involuntary breakup of Scancem by the Commission.

Skanska would have preferred that Scancem management and Aker participate more cooperatively in making such a settlement, but Skanska could not allow their obstinate refusal to participate further endanger Scancem shareholder value.


Danderyd, October 29, 1998

Corporate Communications


For further information, contact:
Claes Björk, President and CEO Skanska AB, Tel +46 8 753 88 00 or
Cecilia Schön, Senior Vice President Corporate Communications Skanska AB, Tel +46 8 753 87 99.


Statement by Claes Björk

We had another Scancem board of directors meeting yesterday. Like other recent board meetings, this one was chiefly characterized by the efforts of Sven Ohlsson and the directors loyal to him to take the company in ill-advised directions that would serve no shareholder's interests.

I informed the Board at yesterday's meeting that I had instructed my lawyers to obtain the Commission's assurances that the settlement proposed between Skanska and the Commission would provide legal certainty for Scancem. The Commission responded in a letter that I have provided in confidence to Scancem, to Aker and to their lawyers. The Commission's response clearly affirmed that they will end their investigation of the 1995 transaction and that the settlement with Skanska would assure the legal validity of Scancem. There can be no other honest interpretation of that correspondence.

One has to ask: Why is Mr. Ohlsson now so concerned about "legal certainty," after he apparently has lived with legal uncertainty of his own creation for three years. He could have called upon Skanska and Aker to notify the Commission about Scancem at any time in the last three years - if he really was that concerned. But he did not do so.

I consider, based upon legal advice of the highest quality, that Mr. Ohlsson's insistence that his proposed notification to the Commission is essential for Scancem's legal certainty is flat wrong as a matter of law, and the Commission agrees. Neither I nor my advisers, nor the Commission, consider that any legal uncertainty will result from the proposed settlement, save for the possibility of appeals by the current management of Scancem and Aker. This is the real legal uncertainty for Scancem, and I invite Sven Ohlsson and Aker to publicly remove it in the interests of the company and its shareholders.

We also discussed at the meeting of the Board the history of the 1995 transaction and the Commission's repeated expressions of concern over its anticompetitive aspects. Mr. Ohlsson was aware of these concerns at the time. I reviewed again yesterday the correspondence from the Commission to Skanska and to Scancem in March and May of 1996. There can be no honest question about the fact that all of the parties to the 1995 transaction - including Scancem - were aware of the Commission's objections at the time of that correspondence.

Finally, I am releasing today a copy of a letter to Skanska employees that recites at length the history of this matter and provides my perspectives on it.

In the clear vision of hindsight, we now know that it was a mistake by Skanska and Aker not to file a notification of the merger in 1995. It was wrong of Scancem management in 1996 to withhold from the Scancem board important information about the Commission's concerns. And it would have been just as wrong in 1998 for Skanska to refuse to enter into talks with the Commission Merger Task Force this fall once it became clear that the Merger Task Force had a strong case and that they would pursue it.

The settlement we have negotiated with the Commission is in the best interests of Skanska, of Scancem and of all the shareholders of both companies. It should and will be approved by the Commission on November 11, and we will proceed to implement it.

Finally, let me be very personal: I did not create this problem. I am here to solve it. That is a tough and time-consuming job that takes considerable energy. But I intend to finish this job so that we can return our attention at Skanska to the implementation of a long-range strategy that concentrates our corporate focus on our core construction and real estate development businesses.