STOCKHOLM (Reuters) – Ericsson has picked the former boss of high-flying mining gear maker Atlas Copco as its new chairman, boosting hopes of a recovery at the Swedish mobile equipment company.
Shares in Ericsson rose as much as 2.2% on Monday after it said Ronnie Leten would succeed Leif Johansson as chairman, pending a shareholder vote planned for March 28. Johansson said in July he wanted to step down.
Investors said Leten, under whose leadership Atlas Copco shares rose twice as much as the European industrial sector index, was a good choice, despite a lack of experience in the telecoms sector.
“This mission is more about leading a work for change together with the CEO. Ronnie will manage that in an excellent way,” said Lars Soderfjell, a fund manager at Alandsbanken.
Ericsson has been hit hard by competition from China’s Huawei and Finland’s Nokia as well as weak emerging markets and falling spending by telecoms operators, with demand for next-generation 5G technology still years away. Its shares have almost halved in value in the past two years.
Earlier this year, it drafted in Borje Ekholm as its new CEO, but activist investor Cevian Capital, which has bought a more than 5% stake, has been pushing for further change.
Cevian Managing Partner Christer Gardell welcomed the choice of Leten, a 60-year old Belgian who stepped down as CEO of Atlas Copco earlier this year.
“He has an outstanding track record as value creator,” said Gardell, who is on Ericsson’s nomination committee, in an email.
Under Leten’s leadership, investors applauded Atlas Copco’s nimble cost structure and strong aftermarket sales that drove high margins and a robust cashflow.
Leten is also leaving his position as chairman at Electrolux, the home appliance maker said in a separate statement on Monday.
At 0950 GMT, Ericsson shares were up 1% at 47.20 Swedish crowns, while Electrolux’s were down 0.9% at 275.80 crowns.
Leten was seen by Swedish media and analysts as one of three likely candidates to become Ericsson’s chairman. The other two were Autoliv CEO Jan Carlson and Johan Molin, CEO of Assa Abloy.
“Mr Leten is a very skilled businessman, technically savvy and strategically versatile,” Johan Forssell, chairman of Ericsson’s nomination committee, said in a statement.
Ericsson also proposed Kurt Jofs as a new board member. Jofs was responsible for Ericsson’s networks business from 2003-2008 and is currently chairman of Finnish IT services company Tieto.
(By Helena Soderpalm and Olof Swahnberg; Additional reporting by Johannes Hellstrom; Editing by Mark Potter)