In reaching this decision Oslo Børs has recognised that there is no explicit agreement between Orkla and Nordstjernen to act in concert as shareholders in Elkem. However the links between the two companies and other circumstances of the situation are so strong that it must be assumed that the parties are acting in concert in the form of a common understanding in this situation that is of such character as to be considered equivalent to an implicit agreement.
The incorporation of Nordstjernen has the character of an alliance based upon commercial return, and the company´s objective is to invest in companies where its owners have common interests or are at least not in opposition. The operation of the company appears to be built upon mutual and personal trust that the company will not operate in conflict with the interests of its owners. In practice the company´s investment decisions require agreement between its shareholders in accordance with the shareholder agreement. There is also much to suggest that the shareholders also agree on the conduct of the investments made, i.e. on the approach to be taken in the companies in which Nordstjernen holds shares.
The 35% shareholding in Nordstjernen held by Orkla is not in itself sufficient to warrant an assumption that the companies act in concert. However Orkla exercises considerable influence over Elkem, and Elkem in turn has a 20% interest in Nordstjernen. Orkla is represented as chairman of the board through its chief executive Finn Jebsen, and is the sole major shareholder represented on the board of Elkem. It must therefore be assumed that Elkem´s shareholding in Nordstjernen is subject to considerable influence by Orkla, without concluding that the shareholding is under the control of Orkla.
It is similarly the case that Orkla´s representation through two of the four members of the board of Nordstjernen does not in itself provide sufficient grounds for consolidation. However the effective extent of Orkla´s influence is greater than this in that the chief executive of Elkem, Ole Enger, is a member (chairman) of the Nordstjernen board. Elkem´s ownership interest in Nordstjernen must, as is the case for Elkem´s other activities, be assumed to be subject to considerable influence by Orkla. This does not imply that Mr Enger exercises his appointment in Nordstjernen on the instructions of Orkla, but assumes only that Orkla has considerable influence over this.
A fourth member of the Board of Nordstjernen, Jens P. Heyerdahl, must be assumed to have a strong personal relationship to Orkla given that he was the group chief executive of Orkla for 21 years and played a major role in making Orkla one of Norway’s largest companies. In addition Mr Heyerdahl still has an office at Orkla in the same location as the group´s executive management, carries out duties for the company, continues to receive salary from the company and holds a not insignificant number of Orkla shares.
The extent of Orkla´s effective influence over Nordstjernen must also take into account that Orkla´s head of investment is responsible for the management of Nordstjernen and Orkla provides commercial services for Nordstjernen.
Oslo Børs is also of the view that there is much to suggest that Nordstjernen´s investment in Elkem is motivated to a large extent by Orkla´s strong wish to prevent Alcoa from gaining control of Elkem without making a materially higher bid to Elkem´s shareholders. The investment in Elkem also appears not to be fully consistent with Nordstjernen´s investment policy as it is expressed in the shareholder agreement.
On an overall view, Orkla may be seen to have major influence in the board of Nordstjernen. If a situation were to arise whereby Elkem´s general meeting had to vote on a controversial issue, Oslo Børs takes the view that, given the effective extent of Orkla´s influence over Nordstjernen in the light of the background and operation of that company, it may be assumed that Nordstjernen would act in the same way as Orkla.
Oslo Børs wishes to stress that an evaluation of whether the parties are acting in concert in the terms of the Securities Trading Act must involve some uncertainty. However there cannot be too strict a requirement for evidence of such collaboration when it is a matter of fact that there are strong links between the shareholders involved. Against the background of the circumstances of this case, Oslo Børs believes that the balance of probability is that the parties are acting in concert in terms of Section 1-4, item 5, of the Securities Trading Act. Oslo Børs must therefore consolidate the parties´ interests in respect of the rules on mandatory offers. This means that Orkla, as the shareholder that has created the circumstances that trigger the mandatory offer rule, is now subject to a duty to make an offer. Orkla must therefore now either make an offer pursuant to Section 4-1 of the Securities Trading Act or dispose of shares pursuant to Section 4-9 of the Securities Trading Act so that the total number of shares in Orkla held by Nordstjernen and Orkla falls below 40%.
Orkla must give immediate notice of whether the company will make an offer or dispose of shares. This decision may be appealed to the Oslo Børs Appeals Committee pursuant to the Stock Exchange Regulations. Any appeal must be submitted within two weeks. If an appeal is submitted the implementation of the decision may, upon request, be deferred pending consideration of the appeal.
