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Sweden reacts to sale of Vin & Sprit

David Landes · 31 Mar 2008, 14:47

Published: 31 Mar 2008 14:47 GMT+02:00

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“This is one of the crown jewels of Swedish business and I see no good argument for selling it now,” said Social Democratic Riksdag member Tomas Eneroth to The Local.

Meanwhile, Patricia Hedelius, economics reporter with the Dagens Nyheter (DN) newspaper, expressed surprise that the Swedish government chose Pernod, considering the company already distributes another leading vodka brand.

“This was the most surprising candidate,” writes Hedelius.

“Pernod has never been the strongest candidate. People didn’t think they had as much interest because they have another brand of vodka, Stolichnaya.”

Hedelius was also struck by Vin & Sprit’s 55 billion kronor ($8.88 billion) price tag.

“That’s really good money. A surprising amount of money,” she writes.

Commentator Olle Zachrison from economic news website E24 felt the deal vindicated Financial Markets Minister Mats Odell’s decision to go ahead with the sale despite uncertainty in the financial markets.

“Mats Odell has struggled to make the point that Absolut is such a unique asset that the price is hardly affected by short term swings. Today’s decision proves him right. A price tag of 55 billion kronor exceeds even pundits’ most positive expectations,” writes Zachrison.

But Enroth, who serves as vice chair of the Riksdag’s Committee on Industry and Trade, questioned the economic rationale of the deal and whether the price may eventually be seen as too low.

“It’s hard to know right now whether it was a fair price,” he told The Local.

“But if that’s the price we pay to lose 1,000 Swedish jobs in a few years and to give up a nice return to Sweden’s treasury every year, then I don’t think it’s a good price.”

He was also skeptical about Pernod’s ability to make good on stated guarantees to keep Vin & Sprit’s production and management in Sweden.

“The best choice would have been not to sell and have the Swedish state maintain ownership,” said Enroth.

Nevertheless, the Swedish Food Workers Union (Livs), welcomed the takeover of Vin & Sprit by the French drinks giant, which had previously discussed its bid with the union.

“We are cautiously optimistic toward Pernod as the new owners. It’s perhaps the best alternative from among those who expressed an interest,” said union leader Hans-Olof Nilsson to the Dagens Industri (DI) newspaper.

Just last week, Livs had come out against an all-Swedish bid led by a venture capital firm connected to the powerful Wallenberg family.

But talk by Pernod of further developing production in Sweden has Nilsson and others at Livs union speculating that the government’s previous decision to shutter Vin & Sprit’s operations in Sundsvall may be overturned.

“If there is a change in that decision it may be the case that Pernod is a better owner than the state,” Nilsson told DI.

But even praise for the deal from the Livs union wasn’t enough to persuade Sweden’s Left Party to embrace the deal.

“The government is selling a profit machine on ideological grounds, which is no good. It’s a loss for the people,” said the Left Party Riksdag member Kent Persson in a statement.

Story continues below…

Persson, who also sits on the Riksdag’s Committee on Industry and Trade, called for the government to invest the proceeds from the sale in environmental technology rather than follow through on current plans to use the money to pay down government debt.

Henrik Brors, DN’s political commentator saw the deal as a win for Odell and for the government’s privatization programme.

“The result of the Vin & Sprit sale will be something of a political resurrection for the minister in charge, Mats Odell,” writes Brors.

“Because the deal was pushed through so quickly and with such a high economic dividend, it gives the government some breathing room to take a more relaxed approach to other sales.”

However, Brors emphasized the difficulty in comparing what the state made from the sale with what it may have earned by retaining ownership of Vin & Sprit, and how such calculations might affect future privatizations.

“It’s just one piece of the political debate which awaits the privatization of state-owned companies,” he writes.

David Landes (david.landes@thelocal.se)

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