Investor AB Year-End Report 1998

Business Wire, Feb 11, 1999

In spite of continued deflationary pressure from the developing countries and the weak development in Japan, the strength of the American economy and the potential for efficiency gains in the united Europe will probably remove the risk of an extensive recession in the world economy.

An unusually eventful year for Investor

The announced broadening of ownership in our largest, wholly owned subsidiary, Saab AB, resulted in a listing on the Stockholm Stock Exchange on June 18, 1998. In addition to giving Saab a more distinct exposure in general terms, the listing gave Saab access to the international capital market and therefore greater financial opportunities. Through this sale, we created shareholder value. By reducing the number of wholly owned subsidiaries, Investor achieved a clearer profile as an industrial holding company. Moreover, our offer of purchase rights to our shareholders enabled them to acquire shares in Saab on favorable terms.

In conjunction with the broadening of ownership, British Aerospace plc acquired a significant shareholding in Saab AB from Investor. This combination improves the potential for export orders for the JAS Gripen, which is borne out by the successful launch in South Africa in the fall. Furthermore, it will be easier for Saab to participate in the anticipated restructuring of the European aerospace and defense industry.

The decision on a merger between STORA and the Finnish company ENSO led to the creation of one of the largest manufacturers of paper and packaging board in the world. The merger between these two equal sized and strong parties is expected to provide substantial cost synergies and good opportunities for growth in an industry increasingly exposed to competition.

The proposed merger between Astra and Zeneca is another example of two parties each of which has grown successfully through its own efforts and which together can build a strong base for continued expansion. The sales and marketing organizations and the product portfolios in the two companies complement each other extremely well. Strong market positions will become increasingly decisive for the future competitiveness of pharmaceutical companies. Given the greater clout and leading position worldwide which the merged company will acquire within its therapeutic areas, we believe that a combined AstraZeneca has far greater potential for strong expansion and profitability than the two companies on their own.

In 1998, Gambro saw the completion of one of the greatest transformations seen in Swedish industry for decades. As a result of systematic, effective and intensive work, Incentive was developed from a rather unfocused conglomerate into a focused, medical technology company, Gambro. Today, Gambro's operations are concentrated mainly on products and services within renal care. This is an area with good and stable growth where Gambro has strong market positions.

Investor participated, as did Gambro, in its capacity as a major owner of Electrolux, in changing the differentiated voting rights between the company's class A and B shares. Thus, Electrolux's annual general meeting decided to increase the voting right for the company's B shares from 1/1000 to 1/10 of a vote. In the summer, Investor acquired all class A shares in Electrolux from Gambro in conjunction with the completion of Gambro's refocusing.