I have neglected David Montgomery and his investment vehicle Mecom’s activites in Europe since the purchase of the Norwegian Orkla group last year, but Kristine Lowe has been following events. Her latest post is here.
Fundamentally, this is a story of globalisation and the democratisation of finance: what happens when a venture capitalist or a big corporation from abroad comes to a small country and make big acquisitions with borrowed money? It often creates fear and uncertainty about distance to the decision-making, the extent of restructuring called for with dramatically higher demands to profitability, and fear that the new owner will challenge established practices and force the acquired businesses to abide by foreign ideas and foreign principles.
Employee representatives from Mecom businesses in Norway, Denmark, Holland, Germany and Poland met in Oslo a week ago to set up a formal network. They fear that the 713 job losses announced for 2007/8 will not be the last and that the high demands for profitability will need more extensive cost cutting.
Olav Skjegstad, an employee representative and board member of Mecom Europe, was one of those at the meeting and he told Lowe:
We expect very turbulent times ahead; new situations may develop as a result of new acquisitions and similar, and we need to be prepared for that. The network is no guerilla group, we want a correct relationship to our new owner, but we also feel the need to keep up to date on what’s happening throughout the media group: what happens in one country might happen in others.
And if all that looks as if it is happening a long way from the UK, remember there has long been speculation that Montgomery, former chief executive of the Mirror, would like to get back into British newspapers.