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Mortal risk to Nordic deal
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December 15, 1999: 6:30 a.m. ET
$48B telecom merger threatened by Sweden-Norway rivalry
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LONDON (CNNfn) - One of Scandinavia's largest ever mergers was in serious danger of unraveling Wednesday, as Swedish and Norwegian government ministers met for a third consecutive day to try to save the deal.
The plan to combine national telecom operators Telia of Sweden and Norway’s Telenor has reopened long-standing antagonisms between the neighboring Nordic countries, and the $48 billion deal is on the rocks.
The trigger was a spat over where to site the cellular subsidiary of the merged company, provisionally known as Newtel. With a board vote on the issue deadlocked at six each, Swedish chairman Jan-Ake Kark used his casting vote to pick a site just outside Stockholm. Newtel's chief executive, Norwegian Tormod Hermansen, vetoed the decision, claiming it went against the company statutes.
Both companies are state owned, but plan an initial public offering next April which would rank as the region's largest ever, valuing the company at an estimated $48 billion. Sweden will own 60 percent of Newtel and Norway 40 percent.
Swedish and Norwegian government ministers continued their talks against a background of increasing discontent with the company. A poll in Sweden Wednesday found that only 21 percent of Swedes want to go ahead with the creation of Newtel, scheduled to take place Jan. 1.
Politicians and senior executives on both sides of the border have expressed discontent with the deal, and pushed for it to be unwound. The agreement was dogged from the start, with regulatory approval delaying it for over a year.
The merger seemed to have finally been sealed during the Telecom 99 conference in Geneva in October. Since then, however, ill-feeling has risen, with local media stoking the flames of resentment towards the deal. Hermansen was roundly criticized in Sweden for fighting with a radio journalist in the street. Hermansen claimed he thought the reporter was a drug addict attacking him.
One solution proposed for the latest dispute is for a court in neighboring Denmark to rule on where the cellular unit should be sited. 
-- from staff and wire reports
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