In response to the proposed change to voting rights in Husqvarna and in view of the new circumstances pertaining in terms of tax risks, AP2 has decided to refrain from tabling an individual proposal at the Electrolux Annual General Meeting.
AP2 has been critical of AB Electrolux’ proposed distribution of Husqvarna shares, whereby Husqvarna AB would establish the same relationship between A-class and B-class shares as its parent company, Electrolux. The Fund, among other things, has pointed out that all Electrolux shareholders are entitled to be assigned shares of the same value. An alternative distribution proposal, involving a single class of share in Husqvarna, was submitted by the Fund for consideration by the Electrolux board of directors. In a press release published on April 6th 2006, the Electrolux board responded by stating that both alternatives were feasible, and could be placed before the Annual General Meeting for consideration. The Electrolux board has nevertheless recommended that the current share structure should be retained.
The matter has generated a considerable amount of analytical discussion. On Wednesday last week, the Electrolux board called a special meeting to keep certain major shareholders abreast of developments. At this meeting, Electrolux informed those present that a decision concerning a distribution of shares that deviated from the board’s proposal would risk incurring a tax liability of USD 500 million (approximately SEK 3 750 million) for the Electrolux Group in the USA.
AB Investor has subsequently stated that it will seek to change the share structure in Husqvarna with respect to distribution, whereby holders of B-class shares will, in one form or another, be offered A-class shares in an amount sufficient to raise the total of A-class shares to approximately 25% of all the shares in Husqvarna. This would significantly reduce Investor’s voting power.
Investor’s proposal does not resolve AP2’s reservations in principle concerning A and B-class shares, but the proposal does involve a much more equitable approach to the treatment of shareholders than would derive from approval of the proposal tabled by the Electrolux board.
AP2 is also convinced that Investor, for its part, concurs that all shares – whether A or B-class shares – shall carry the same bid value in the event of a takeover. Future risks of unjust treatment can thereby be eliminated.
In the light of the above, AP2 has decided to withdraw the alternative proposal for distribution of shares previously submitted for consideration by the Electrolux Annual General Meeting.
“Through our action and Investor’s response, the position of holders of B-class shares in Husqvarna has been significantly improved. The fundamental principle that shareholders should be entitled to equal treatment remains unresolved, however, and we shall continue to promote the idea that all shareholders shall have equal rates to the economic value of their investment,” says Eva Halvarsson, CEO of the Second Swedish National Pension Fund/AP2.
Please refer any questions to Carl Rosén, Head of Corporate Governance & Communications, at +46 (0)739 40 10 10.