Key Ericsson Shareholder Reduces Stake to Free Up Capital

(Bloomberg) -- Cevian Capital AB has cut its shareholding in Ericsson AB, in a move the activist investor says is designed to release capital for a new target.

In the last 60 days, Stockholm-based Cevian sold 15 million shares, leaving it with a 4.94% stake in the Swedish phone network-equipment giant, the investor said in an email to Bloomberg.

Shares in Ericsson fell as much as 2% on the news.

“We have freed up capital for a new investment by adjusting the portfolio weight in Ericsson,” Christer Gardell, managing partner at Cevian, said. “Ericsson has a lot more to offer and the company will continue to be one of our largest investments.”

The decision to sell follows Ericsson’s 18% share-price gain this year, after the company managed to build 5G networks faster than expected, reaching profitability targets ahead of time. Ericsson currently has a market value of about $45 billion, compared with roughly $24 billion for Finnish rival Nokia Oyj.

“We expect Ericsson to continue to exceed market expectations, as evident in all quarters during 2020,” Gardell said. “We still believe that today’s valuation is far too low.”

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