Sweden came under renewed pressure to walk away from France Telecom’s $39.5bn informal takeover offer for TeliaSonera after the government’s main watchdog said the administration was not properly prepared to negotiate the highest price for its stake.
The National Audit Office issued a critical report that accused the government of failing to use “best practices” when it sold an 8 per cent stake in TeliaSonera last year and warned similar weaknesses threatened the coming sale of its 37 per cent stake.
Göran Hyltander, a director at the National Audit Office, said the government needed to improve its preparation, planning and execution ahead of the coming sale. “The risk is that they do not achieve the best possible result,” he said.
The public criticism of the Swedish government by the nation’s audit office will raise the pressure on the administration to stand by its existing demand for a higher offer from France Telecom or walk away from the deal.
France Telecom has offered the $39.5bn in cash and shares for TeliaSonera, but the offer has been rejected by the government and the company for being too low. The French company has refused to increase its offer.
The Swedish government is proceeding cautiously as it cannot afford to make any mistakes during the sale of its stake due to the possible political consequences.
The TeliaSonera privatisation carries particular sensitivities because in 2000, the then Swedish government sold a batch of shares in an initial public offering at SKr85 each.
About 1m Swedes of a population of 9m bought shares, which crashed after the technology bubble burst and the government was criticised for cashing in at the expense of the public. The current government must be seen to be doing everything possible to ensure it gets the best price in the coming sale.
Mats Odell, Sweden’s minister for financial markets, has made clear the government is prepared to walk away if the price is too low and on Tuesday rejected the criticism from the state audit bureau.
“The theory [that] there is a best practice handbook is not realistic,” he told the Financial Times. “We, with our advisers, have adopted processes we believe ensure the best result.” The government’s adviser on the sale is Morgan Stanley.
The audit report comes as tensions grow between the French and Swedish sides. The Swedish government has refused to meet the French company unless it increases its bid, but France Telecom has insisted the government meet to discuss its original offer.
France Telecom made a small concession on Monday after agreeing to extend a self-imposed 15-day deadline for its offer that would have expired on Friday. No new deadline has been set.
The National Audit Office, Riksrevisionen, is an independent but state-financed body with a broad remit that includes making sure the Swedish state prepares and consults properly before selling stakes in state-owned companies.
