Sweden’s Stora Celebrates Its First 700 Years of Success
In what could be an early case of insider trading, Bishop Peter of Vasteras in 1288 traded land and fishing rights for a one-eighth interest in the Great Copper Mountain Mining Co.
The deed of purchase from that deal lays the basis for the firm’s claim to be world’s oldest continuously operating company.
Today, the 700-year-old firm--Stora Kopparberg AB in Swedish--is undergoing expansion typical of the aggressive style of Swedish business facing increasing competition for access to European markets.
Celebrating Success
As it marks its birthday, the company is celebrating its success at shedding less productive businesses and establishing itself as a world power in forest products.
Parties, sporting events and a meeting of the 9,000 shareholders in the mine’s 300-foot-deep open pit are scheduled this summer to mark the company’s seven-century mark.
Stora is reportedly spending up to $16 million on the birthday, including invitations this year to its 22,000 employees to visit the company’s headquarters in this town in central Sweden.
The mine had already existed for 200 years and had provided swords for Viking raiders when Bishop Peter bought into the company back in the 13th Century. He was apparently acting on a tip from monks in Europe of a technological advance in water wheels that could be used for power in the mine and greatly increase profits.
The mine was the source of wealth for the Swedish empire during the 17th Century. Now Stora is devoted mostly to paper and pulp production, and the mine in the mountains outside here is kept open more for sentimental than for economic reasons.
“After 700 years, we don’t want to be the ones to close the mine,” said Tommy Forss, curator of a small company museum.
Diversified Company
Stora owns forests half the size of Belgium, produces enough liquid-packaging board to make two milk cartons for every person in the world and makes newsprint for Sweden’s newspapers and some of Europe’s other largest dailies.
A restructuring plan begun 10 years ago disposed of the company’s steel interests and diversified its forest-products holdings. Since 1984, it has acquired leading manufacturers of board, packaging and fine papers. Stora president Bo Berggren and board chairman Peter Wallenberg are credited with the success of the transformation.
In March, the company made its boldest move yet, acquiring Swedish Match AB, a multinational consumer-products group, for $1 billion, the largest cash and securities deal in Swedish history. Both companies are dominated by investments companies controlled by the wealthy industrialist Wallenberg family.
The latest move was one of a series of business consolidations by the nonaligned Swedes, who are bracing for the elimination of trade barriers within the European Economic Community in 1992.
Sweden has remained outside the Common Market to safeguard its neutral foreign policy, but it is bargaining for “economic integration” that will protect it from discrimination once the EEC dismantles internal tariffs.
Keeping Doors Ajar
In the meantime, companies have begun merging or increasing their holdings in EEC-based industries to keep doors ajar that might otherwise be slammed shut in 1992.
For instance, Swedish Match, the world’s leading manufacturer of lighters and wooden matches, recently bought Wilkinson Sword, a major British producer of matches, shaving products and other household goods, and the West German flooring group Pegulan. Both offer Stora access to the Common Market.
“We have to create the financial entities with strength enough to meet the competition. That means consolidation,” Stora president Berggren said.
Too Big to Be Ignored
He said Stora and Swedish Match sell half their production to the EEC, or about 20 billion kronor ($3.3 billion), making the combined company too big to be ignored.
In similar fashion, Asea AB merged with Switzerland’s Brown Boveri and Co. late last year to become the world’s largest heavy-electrical engineering firm. Although both Sweden and Switzerland are outside the EEC, the newly merged company has enough holdings in EEC countries to give it a pipeline into the market.
Ultimately, Berggren said, Sweden will have to join the EEC to avoid isolation.
As for now, “by establishing ourselves within the Common Market, we at least limit the disadvantage.”
