3.3. Statoil
Statoil had closely followed developments in Saga since the early 1990s when the company bought Volvo’s share holding. Statoil’s ownership positioning was from the very beginning purely strategic and with a view that one day Saga would be in play. The company’s position towards Saga in the 1990s was based on two assumptions: firstly that ultimately there would be some sort of “Norwegian solution” sought when and if Saga was broken up. And secondly, that Statoil’s management was opposed to Hydro taking full control of Saga. Such a move would upset the balance between the two companies meaning that Hydro would become too powerful in relation to Statoil. Balance was the name of the game. So Statoil’s management foresaw all along some kind of division of Saga between Statoil and Hydro. Whether these stated positions were merely ex-post rationalization is of course unclear. If they were true statements of Statoil’s positions during the 1990s, then they were certainly an example of good strategic positioning.
Saga was constantly on Statoil’s strategic agenda. During the autumn of 1998 Statoil increased its equity in Saga from 12 percent to 20 percent. Saga’s management reacted very strongly. What Mr. Schnitler did not know was that the move had been discussed and approved in cabinet. However, Statoil had accepted that 20 percent represented an upper limit and that any further increase would have to have explicit government approval.
Just before Christmas 1998 the Chairman of Statoil’s board, Mr. Kjell Kran, paid the then Minister of Petroleum and Energy, Marit Arnstad, a visit, where he argued that Statoil should be allowed to take a 40 percent share in Saga. Following a discussion in cabinet, this was rejected by the government.
Against this background it is hardly surprising that Statoil rejected RWE’s offer to buy Statoil’s 20 percent equity at a price of NOK 103 (see section 3.1.6 above). Statoil wanted to keep a strategic position in the company. And when Statoil also got to know that other companies (Enterprise) were in discussions with Saga, it drew the conclusion that Saga was now in play.
During the winter of 1999 Statoil’s top management was divided, one group wanted to have a quick and total takeover of Saga. The other group pleaded for more caution, precisely in order not to upset the balance between Hydro and Statoil. In the end the latter position won out.
But there could have been other reasons for this position. As the winter of 1999 wore on, Statoil found itself in an increasingly difficult position, something that limited its ability to move aggressively on its own. Its 1998 results were very bad. This made any plans to make a cash bid for Saga, which had been extremely demanding before, virtually impossible.
In addition Statoil came close to temporary paralysis as its CEO, Harald Norvik, had to resign on April 23 because of the cost overruns on the Åsgard field and a new board was installed.
Harald Norvik did, however, use the interregnum between his dismissal and actual departure to the benefit of Statoil. Egil Myklebust decided on April 28 to make a move to take over Saga (cf. section 3.2 above), but he still had to decide what to do with the largest shareholder, namely Statoil with its 20 percent share. He could of course have let them sit as a minority shareholder. This was however not a very appealing option. So instead he chose to cooperate with Statoil.
Different theories can be put forward about how the joint bid by Statoil and Hydro on May 27 came about. Was this a result of the government wanting a “Norwegian” solution and pressing the different companies in that direction? Or was it because Hydro was bowing to the inevitable, namely that no deal could be made final unless Saga’s largest shareholder was part of the deal? Or was there some sort of understanding between the companies before Hydro’s bid?
Whatever the reason, the end result was clear. On May 27 Statoil and Hydro announced an agreement to make a joint bid. Statoil, which had a rather weak bargaining situation from the start, managed to obtain 25 percent of Saga’s total assets and also to secure the transfer of two key operatorships from the Saga portfolio. (The Snorre area including Vigdis and Tordis and Haltenbanken South with Kristin).
Statoil and Hydro’s relations to the media
Both Hydro and Statoil had to take into account what the reactions of the wider Norwegian community would be if they went ahead with their plans. How would the media react? Contrary to all other major external players directly or indirectly involved in the takeover, the Norwegian media very much leant towards a Hydro/Elf solution. The liberal newspaper Dagbladet turned out to be the only one of the major Norwegian newspapers in favour of a Hydro takeover. All the other major newspapers argued with different degrees of force that a merger between Elf and Saga was preferable to a Hydro takeover of Saga. The large TV channels and the Norwegian Broadcasting Corporation (NRK) were more neutral. It is especially interesting to note that most of the media thought that a merger with a foreign company (Elf) was preferable to a “Norwegian” solution. There were a number of reasons for this:
- None of the newspapers were much preoccupied with the financial markets’ focus on the concept of “shareholder value”. Instead they put emphasis on other arguments. Most of the papers noted with approval that a takeover by Elf would still maintain Saga as an independent entity and thus maintain “diversity” on the Norwegian continental shelf. This was contrasted with the consequence of a Hydro/Statoil takeover that would have eliminated Saga as a separate company.
- A natural identification with the underdog. The idea that two big companies should jointly swallow a third and much smaller company that for more than 25 years had been a well known Norwegian company met with some popular resistance that the press articulated.[40] Note that even as late as 1999 the Norwegian public was still relatively unfamiliar with the wave of mergers and acquisitions that would later accelerate in the Norwegian economy.
- A well orchestrated campaign by Saga’s employees to defend their work places, which involved a strong media presence
Parts of the Norwegian petroleum supply industry also questioned the wisdom of the takeover. This industrial cluster had two main reasons for its scepticism. More companies operating on the Norwegian shelf were expected to give more work for the industry, and a basic sympathy with Saga’s historic industrial model of offshore development that tended to give a larger role to the offshore industry rather than building up large in-house technical units in the oil companies.
[40] A picture taken on May 27 after Hydro and Statoil had agreed to make a joint bid for Saga reinforced this sentiment. It showed Harald Norvik and Egil Myklebust; the two CEOs, with a broad grin on their faces after having signed the deal.