Large Finnish pension insurers are suspicious of Novator’s intentions for Elisa

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The largest private sector pension insurers in Finland - Varma, Ilmarinen, and Pension Fennia - have taken an unusually strong stand against the plans of Novator Finland to split the Finnish telecommunications operator Elisa in two.
      With its stake of 11.5 per cent, Novator, an investment firm owned by the Icelandic tycoon Thor Björgólfsson, is Elisa’s largest shareholder, while Varma, Ilmarinen, and Pension Fennia hold just some 4 per cent of the company between them.
     
On Thursday, the insurers issued a joint press release saying that they do not support Novator Finland Oy’s proposals for Elisa Corporation’s extraordinary general meeting on January 21st, 2008.
      Last month, Novator called for a reshuffle on the Elisa board and for splitting the company into two separate parts. In its vision, a separate holding company would deal with international growth issues and would be responsible for major strategic decisions.
      Novator has justified the proposed amendment with the need for Elisa to more aggressively pursue international expansion.
     
”The proposed amendment could shift significant decision-making power from Elisa’s shareholders to the Board. As a result, a 10% minority shareholder could in practice gain control over Elisa’s decision making, which is not in the best interests of the other shareholders”, the three insurance companies noted in their joint statement.
      ”We are strongly of the view that value creating and rapid international expansion can be achieved equally well with the current company structure. Furthermore, Novator has provided no details or real substance as to what the aggressive international expansion they refer to would be”, argued Risto Murto, the Chief Investment Officer of Varma.
     
After restructuring, Elisa’s Board of Directors could in practice make a decision to sell the company without hearing the shareholders.
      ”The purpose may be to promote just one shareholder’s interests, which is why we oppose the proposal”, says Jussi Laitinen, the Chief Investment Officer of lmarinen.
     
On Thursday, Novator issued its own press release, saying that it wants two seats on the Board of Elisa, while giving an assurance that it does not seek to gain control over Elisa’s decision-making with a view to a potential sale of the company.
      While planning to introduce two new board members, Novator wishes for some members to continue in the new board, according to its statement.
      According to Varma’s Risto Murto, the pension insurers have nothing against the demand that Novator - as the largest shareholder - should obtain two seats on Elisa’s Board. However, Murto finds it suspicious that the reshuffle has to take place so urgently that an EGM has to be convened.
      ”We are opposing the hurried plan as there is a danger that the entire board will be replaced by another put forward by a single shareholder”, argued Murto.
     
Elisa has a very broad shareholder base with approximately 42 per cent of the shares being owned by foreign shareholders. In case they wish to participate in the EGM, they will have to send their registration two weeks prior to the meeting.
      However, as reported yesterday, the Board of Elisa was not unanimous while rejecting Novator’s demands. Reportedly the issue was nevertheless taken forward with a clear board majority.
      At present, the board has no longer any role in the dispute, as its task is to manage the company. It is now caught in a serious conflict of interests between shareholders.


Previously in HS International Edition:
  Elisa Board Member expresses disapproval of policy chosen on corporate restructuring (13.12.2007)

Links:
  Press release 13.12.2007: Varma, Ilmarinen and Pension Fennia oppose Novator´s Proposals at Elisa EGM

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