The news agency Bloomberg reported on Thursday that the network equipment company Nokia is considering selling all or part of its mobile online business. The speculated purchase price for the operations would be around ten billion dollars.
CEO of Nokia Pekka Lundmarkin career can accommodate a long series of business arrangements. If the Nokia deal goes through, it would definitely be the biggest of his career.
Lundmark has CEO experience of a listed company before Nokia, an energy company From Fortuma lifting equipment company from Konecranes and a kitchen fitter About Hackman.
Hackman was in charge of Lundmark from 2002 to 2004. During his short tenure as CEO, Hackman received several buyout offers and the company was finally sold to an Italian For ALI Group in 2004.
Lundmark’s career continued as the CEO of Konecranes from 2005 to 2015. In ten years, Konecranes made a total of 17 different acquisitions. Companies were bought in whole or in part around the world.
During Lundmark’s shift at Konecranes, the size of the acquisitions was mainly in the millions or tens of millions of euros. For example, during 2010 and 2011, Koncranes bought an Indian WMI Cranesin with 57 million euros.
The biggest deal of my career was a disaster
The transition to giant stores in the billion range took place during Lundmark’s time at the helm of Fortum. Lundmark served as the company’s CEO from 2015 to 2020.
Fortum had just sold the electricity transmission networks it owned in Finland, Sweden and Norway for just under ten billion euros, and the cash was burning.
In 2017, information began to leak out that Fortum started to buy the German energy industry giant Uniperin. A majority stake in the company was acquired in several installments during 2018 and 2019.
Fortum was particularly interested in Uniper’s hydro and nuclear power plants in Sweden, but they were not for sale separately. So Fortum ended up making a purchase offer for the entire company, which included, among other things, German and Russian power plants as well as a significant brokerage business for raw materials.
Fortum’s share of Uniper eventually rose to around eighty percent. About seven billion euros were spent on the acquisition of shares.
The Uniper purchase was contradictory from the beginning. The company guaranteed cash flow for Fortum, but there were problems in harmonizing corporate cultures. In 2017, Uniper’s management bought a front-page advertisement from Helsingin Sanomat, in which it urged Finns not to buy Uniper.
However, the store’s biggest problems only started after Lundmark’s CEO term. A key part of Uniper’s business was the import of gas from Russia to Germany. Deliveries were agreed for years ahead with derivative contracts.
Uniper ran into difficulties already at the end of 2021, when the price of natural gas started to rise sharply. Long derivative contracts require significant security payments from Uniper. In order to cover the insurance payments, the parent company Fortum had to lend Uniper eight billion euros.
The problems escalated considerably after the outbreak of the war in Ukraine. In the summer of 2022, Russia suspended gas deliveries to Germany and Uniper had to buy natural gas for its customers from the market at a higher price than the selling price.
The company was burning money at its worst, tens of millions a day. The German state first organized a rescue package for Uniper and finally ended up buying the company from Fortum for a nominal price of 0.5 billion euros.
Fortum’s losses from the Uniper deal were finally around 5.8 billion euros, according to the company itself. This is one of the biggest losses in Finnish business history.
Lundmark has also made deals worth billions in Nokia
Lundmark had time to take over as CEO of Nokia already in 2020 and thus did not have to sort out the Uniper mess.
At Nokia, Lundmark has already made two significant business arrangements. In June, Nokia announced that it had reached an agreement on the sale of the ASN business of undersea networks to the French government. The value of the signed put option is EUR 350 million.
The very next day, Nokia announced that it would buy a Californian manufacturer of optical network solutions and semiconductors Infineran for about 2.3 billion US dollars.
It is inherently impossible to assess the outcome of these business arrangements yet.
Fact
Pekka Lundmark’s career in the stock market
2002-2004: CEO at kitchen supplier Hackman. The company was bought out of the stock exchange in 2004.
2004-2005: Vice President of crane manufacturer Konecranes.
2005-2015: CEO of Konecranes. Over the course of ten years, the company made several business arrangements, the scale of which was mainly in the millions or tens of millions of euros.
2015-2020: CEO of energy company Fortum. During the Lundmark period, Fortum began to buy the German energy company Uniper. The deal ultimately resulted in a loss of around 5.8 billion euros after Uniper’s crisis.
2020 onwards: CEO of Verkkolaitehtiö Nokia. In June, Nokia announced that it would buy Infinera, a Californian manufacturer of optical network solutions and semiconductors, for about $2.3 billion. In August, Bloomberg reported that Nokia is considering selling its mobile network business.