Are you enterprise? (Special Business Tactics) Meet the tycoon who’s buying Bulgaria’s BTC in 2005
Bjorgolfur Thor Bjorgolfsson
Age: 42 Fortune: self made
Net Worth: approx. 2.2
Country Of Citizenship: Iceland
Residence: London, United Kingdom, Europe & Russia
Marital Status: engaged, 1 child
New York University, Bachelor of Arts / Science
Björgólfur Thor Björgólfsson (born 1967-03-19 in Reykjavík, Iceland), known internationally as Thor Bjorgolfsson is an Icelandic businessman and entrepreneur, and chairman of the financial firm Straumur-Burðarás and chairman of Investment firm Novator.
He has been declared “Iceland’s first billionaire”, and is currently ranked by Forbes Magazine (in 2007) as the 249th-richest person in the world (up from 350th last year) with a net worth of 3.5B$. The Sunday Times Sunday Times Rich List (2007) lists his net worth at £2,000 million.
Björgólfur chose to go to the United States in 1986 at the time that his father’s bankrupt firm, Hafskip, was embroiled in a financial scandal involving fraud and embezzlement.
In 1991, he graduated with a B.S. from New York University and opened a brewery in Russia.
All though experiencing difficulties at first, his Bravo Brewery became a success on the premium beer Botchkarov. He later sold that venture to Heineken for $400 million and returned to Iceland to gain interest in numerous ventures there.
In 2002 his holding company gained 45% share of Landsbanki Íslands, Iceland’s second largest bank.
In 2003, he bought a ruling share of the largest Icelandic shipping line Eimskip and the investment company Burðarás. He has since sold Eimskip to the Avion group. He has or had stake in four of the ten largest Icelandic businesses.
He is also chairman of Actavis, has significant holdings in Bulgarian telecommunications, and acquired Indian research company Lotus Laboratories.
In 2005 he also acquired 25% share in Polish telecommunication company Netia.
The Actavis Group acquired the New Jersey based generic drug company Amide Pharmaceutical for 500,000,000 USD in 2005.
He is a patron of the arts.
Iceland’s lone billionaire. Cofounded Bravo brewery in Russia and created popular Botchkarov beer brand. Sold to Heineken in February 2002. Used proceeds to go on a buying spree in native Iceland and in Eastern Europe. Set up an investment company, Novator, in London that has been very active buying stakes in telecom sector. In past year, through Novator and other entities, has upped stake in his most valuable holding, Icelandic drug company Actavis; bought out one of his two Icelandic partners; purchased Bulgaria’s EI Bank; invested in Finnish telecom Elisa; and announced plans to exercise option to boost holding in Bulgarian Telecommunications company. Also owns hotels on Black Sea Coast and land in Spain. Lives in London with girlfriend of 15 years and their one-year-old son.
After his father was felled by a business scandal, Thor Bjorgolfsson went to find his fortune and redeem the family name. He’s now Iceland’s first billionaire.
Grudges die hard in Iceland–even after 19 years. Bjorgolfur Thor Bjorgolfsson still remembers the morning the police arrived at his home and took away his father for questioning. By 8 p.m., when there was no sign of his dad, Bjorgolfsson turned on the TV and discovered that his father and other executives from Hafskip, Iceland’s second-largest shipping line, had been detained. They were later charged with 450 criminal counts, from embezzlement to fraud. Word tore through the tiny country–it has fewer than 300,000 residents–as Hafskip’s collapse became a national scandal.
Ever since that night in 1986, Bjorgolfsson has been on a quest to redeem his family’s reputation. “Respect is the number one thing that occupies my mind,” says Thor (pronounced “tore”), as he is universally known. “Power, money, that’s just the road to respect,” he explains, before paraphrasing a well-known Icelandic verse: “After all, money disappears, friends die, and you die yourself, but your reputation remains.” That pursuit has led him to the U.S., Russia, Bulgaria and eventually back to Iceland for a triumphant homecoming, when he seized control of the nation’s oldest bank and installed his father as its chairman.
Like his Viking ancestors, Thor got mad, got even–and got very rich. It took the 38-year-old less than a decade to become Iceland’s first billionaire (net worth: $1.4 billion), with stakes in four of the nation’s ten largest public companies and in Bulgarian and Czech telecom outfits.
Entrepreneurship is in Thor’s blood. His great-grandfather, Thor Jensen, left Denmark at 15 in 1878, went on to control half a dozen or more businesses, survived bankruptcy twice and ended up as one of Iceland’s largest landowners. One son became prime minister; another ambassador to the U.S. A son-in-law ran the country’s largest shipping line, and a second, Thor’s grandfather, headed Shell Iceland.
Thor’s father, Bjorgolfur Gudmundsson, also enjoyed success in business before Hafskip’s collapse. Faced with tough competition, Hafskip fell deep into debt. The firm might have sunk quietly had it not been for its ties to Iceland’s finance minister, who was its former chairman and still a shareholder. Instead, its insolvency in late 1985 became a battleground for rival politicians, who pushed for a criminal investigation. That dragged on for six years. Thor’s dad was finally found guilty on five counts of minor bookkeeping offenses and sentenced to 12 months’ probation.
Thor headed off to New York University for a degree in finance. After graduating in 1991 he returned to Iceland to pay off student loans, working for his father, who oversaw the brewery and soft drink units of Pharmaco, a drugmaker. But he was itching to leave again and did so after Pharmaco sold the rights to its beverage brands and asked Thor’s dad to dispose of the assets. His father contacted a fellow Icelander, Ingimar Haukur Ingimarsson, then a consultant in Russia, who agreed to take the old equipment to start a plant there.
With his friend Magnus Thorsteinsson, Thor signed up for the adventure, expecting a year-long sojourn. He ended up staying much longer. Constant devaluations of the ruble, power surges, shortages of sugar and a bad water supply conspired to make this quite an ordeal–“like ten years in purgatory,” he recalls. Getting around the St. Petersburg suburbs, an area with few taxis, was a harrowing gamble of flagging down strangers in cars. Not to mention the ever-changing cast of bureaucrats they had to deal with.
Worst of all was the nasty fight within the company. Claiming that some of the bottling equipment had arrived late and didn’t work as promised, Ingimarsson and his British partner tried to renegotiate with Pharmaco for a lower sale price. That failed. They accused Thor’s dad, representing Pharmaco’s interests, of trying to cut a side deal to grab a stake in the company and later of forging shareholder agreements to transfer the entire company to Thor and himself. Thor and his father denied the charges and insisted that they had legitimately bought the company from Ingimarsson and assumed its debts, which they paid off. The fight dragged on in Russian and Icelandic courts for three years. Finally, in 1999, a Reykjavik judge ruled that the sale was invalid because Ingimarsson did not have the authority to sell the company. No damages were awarded.
By then Thor and his associates had moved on. A second Russian venture, Bravo, started out making “alcopops,” premixed cocktails in a can, with such partners as Johnnie Walker and Gordon’s Gin, racking up $20 million in 1998 sales. Why not think bigger? With a $25 million investment from Capital Group of Los Angeles, for a 30% stake, Thor and Magnus poured themselves into creating Botchkarov (literally, “the Barrel family”), a premium beer for the middle-class masses. To kick it off, Bravo invited 10,000 guests to the center of St. Petersburg for a launch party and followed up with a big ad campaign.
Things began breaking Thor’s way. Just as the beer was rolling out, Deutsche Bank invited him to invest in a tiny Bulgarian drug company. Balkanpharma needed cash to acquire several generics makers in an upcoming privatization. Thor scrounged up $5.3 million by partnering with Pharmaco and his father, selling some stock and borrowing the rest. A year later, when Deutsche Bank cashed out, Thor helped merge Balkanpharma and Pharmaco, took over as chairman and boosted his family’s stake.
Back in Russia Botchkarov was taking off. By 2002 the beer had a 3% share of Russia’s then $2.5 billion-a-year market for suds. In February 2002 Heineken bought Bravo for $330 million in cash; $110 million went straight into Thor’s pocket.
Now, at last, he felt ready to go home. Thor’s investment company, Samson Holding, in which his father and Magnus are partners, made an audacious offer to buy a 45% stake in the National Bank of Iceland, Landsbanki. The oldest bank in the nation (opened in 1886) and the second largest (2004 assets: $9 billion), Landsbanki had once operated as Iceland’s central bank; one-third of the country still does its banking there.
Egalitarian Iceland still had deep ambivalence about capitalism, but making a pile of money abroad was okay. Moreover, much of the country felt that Thor’s dad had been unfairly targeted in the Hafskip scandal, so his redemption seemed like poetic justice. Still, their bid to buy Landsbanki put in play a rival, Bunadarbanki, as well. What followed was a lot of jockeying among politicians to get a piece of the action for their own supporters. The process dragged on. Privatizing in Bulgaria, Thor thought, was a lot easier. In the end Samson won a 45% share of Landsbanki for $140 million in late 2002, even though it was not the highest bidder; Bunadarbanki went to a group of Iceland companies for a similar amount.
Thor was by no means through. Within a month of bidding for Landsbanki, he engineered the merger of Pharmaco and its chief competitor, Delta. Renamed Actavis, the $600 million (sales) generic pharmaceutical maker is today the second-most-valuable company on the Iceland Stock Exchange, and Thor’s 36% stake is worth $700 million. In September 2003 he and his partners started buying up shares in Eimskip, Iceland’s oldest shipping line, paying $35 million for a 9% stake. At the same time, Landsbanki was also buying, paying $71 million for 19%. Within six months, with Thor now as chairman, they dumped the fishing assets for $300 million and restructured the firm into a financial holding company called Burdaras, which plans a public offering of Eimskip this year. Such deals, made at home, offended some Icelandic sensibilities. Now there were public rumblings that Landsbanki’s share of Burdaras was a conflict of interest.
Still, it’s hard to exaggerate the effect that Thor and a growing band of capitalists have had on their countryfolk. “Five years ago everyone wanted to become a rock star because of Bjork,” says Andri Sveinsson, 33, a former singer in a band who is now finance director of Thor’s Samson. “Now everyone wants to become an entrepreneur.” A crop of tycoons, all 40 and under, has emerged. Among them: Jon Asgeir Johannesson, who controls 45% of Iceland’s retailers and has pieces of 12 U.K. retailers; brothers Agust and Lydur Gudmundsson, who cofounded and run Bakkavor, a supplier of refrigerated foods to U.K. chains; and Hannes Smarason, chairman of Icelandair, which recently bought 10% of Britain’s EasyJet.
Thor has no interest in making enemies, particularly in a country that he is outgrowing. “I don’t want to be seen as too powerful in Iceland,” he says. He bought out his father in Actavis and reduced his own share in Samson from 52% to 43%. He is pushing for Actavis to list on the London Stock Exchange and is helping Landsbanki and Burdaras look for overseas deals. He spends a lot of time at home in London or traveling in Europe, where he owns large stakes in telecom companies in the Czech Republic and in Bulgaria.
There are extracurricular activities, too. Thor is backing an Icelandic production of Romeo and Juliet, which he helped produce in London and hopes to bring to New York. He and his girlfriend of 14 years are expecting their first child this month. “I got the respect I wanted,” says Thor. “Now I can begin the second half of my life.”
By the Numbers Fire in Ice Traditionally egalitarian, Iceland is quickly becoming a haven for capitalism–even with but 32 public companies.
$8.7 billion Iceland’s estimated 2003 GDP.
194,000 The number of Icelanders between the ages of 18 and 65.
225% The performance of the Iceland Stock Exchange since 2002.
800 The number of hot springs.
Sources: Iceland Stock Exchange; CIA’s World Factbook.
AIG Acquires Bulgaria’s Telco BTC in EUR 1.08 B Deal
3 May 2007, Thursday
Icelandic tycoon Thor Bjorgolfsson sold his 65 % option in BTC to an investment arm of insurance giant AIG in a EUR 1.08 B deal.
AIG Global Investment Group has acquired a majority stake in Bulgaria’s dominant telecom firm BTC, the company announced on Thursday.
The investment arm of the insurance giant has sealed a contract with Novator, Icelandic tycoon Thor Bjorgolfsson’s investment vehicle, and Viva Ventures for the acquisition of its 65 % option in BTC.
The sale price is set at EUR 1.08 B, bringing the total value of BTC to EUR 1.66 B, the company said in a statement to the Bulgarian Stock Exchange. It includes the recently proposed dividend of BGN 0.55 (EUR 0.28) per share.
AIG Global Investment Group is expected to acquire another 25 % in BTC as part of the deal.
The transaction is believed to be the largest private merger and acquisition transaction in Bulgaria to date.
The agreement will become officially a fact on June 11 when the three-year ban on BTC resale expires.
AIG joined the auction for Bulgaria’s BTC as it entered its final days. The insurance giant defeated in the last moment Dubai-based Oger Telecom, Turkey’s largest mobile operator Turkcell, US private equity fund Mid Europa Partners and a consortium of US private equity firms Texas Pacific Group and Warburg Pincus for the deal.
“The acquisition of BTC fits well into our strategy of investments in this growing region and builds on our extensive previous experience in Bulgaria and the telecom sector,” said Pierre Mellinger, who has overall responsibility for AIG Capital Partners’ private equity activity in Central and Eastern Europe.
Thor Bjorgolfsson, founder of Novator, commented: “We are pleased to be realizing our investment in BTC with which we have been involved since 2003. We have been investors in Bulgarian businesses since 1999 and we intend to continue to invest in Bulgaria with the country’s EU accession further improving the investment environment.”
At the beginning of 2006, right after the privatisation of Bulgaria’s main telecom operator, Thor Bjorgolfsson acquired an option to buy a 100 % stake in Vienna-based Viva Ventures, which owns 65% in BTC. Viva Ventures paid EUR 230 M in the summer of 2004. Later on the businessman bought another 25% stake with compensation instruments, raising his stake in BTC to 90%.
BTC, which is the main telecom operator in Bulgaria employing approximately 20,000 professionals, has 2.9 million phone installed connections.
The telecom forecast a 16% fall in its net profit to BGN 111.6 M in 2007 due to increased competition and dropping prices.
Bulgaria has one of the highest fixed-line telephone penetration rate in Central and Eastern Europe – approximately 85% of all households have a telephone.
Meet the tycoon who’s buying Bulgaria’s BTC
01:00 Mon 19 Dec 2005 – Ivan Vatahov
A SURPRISE to some and a natural development to others, Icelandic billionaire Thor Bjorgolfsson announced in late November he was buying Bulgarian Telecommunication Company (BTC).
It was a surprise to those who thought it highly unlikely that a businessman of such stature would wait until the summer of 2007 before actually becoming the majority owner of BTC, as the privatisation contract for the telecom envisages. However, the news was not unexpected for the analysts who have seen Bjorgolfsson slowly but surely moving towards the acquisition.
BTC was privatised in 2004 when it was bought by Viva Ventures, an Austrian-registered special investment vehicle, created by the US investment fund Advent. At that time, Bjorgolfsson was already known to be one of Advent’s “partners” on the BTC deal. No one could say for sure, however, what the Icelander’s contribution to the 230-million euro price paid for 65 per cent of the shares of the telecom was. There were speculations, even, that Bjorgolfsson might have secured most of the funding for the transaction.
After the deal, in fact, media attention in Bulgaria mostly concentrated on the fact that the price for BTC was too low. And there was good reason for such concern, since only a few months later, the state sold the rest of its shares in the telecom (about 33 per cent) on the Bulgarian Stock Exchange – Sofia for the price of 630 million leva (more than 320 million euro).
Of course one could hardly blame Bjorgolfsson for this disparity even if he was behind the deal, as any good businessman would have done the same. Furthermore, Viva Ventures was a last shot for BTC to be privatised before its price crumbled because of the telecom market liberalisation.
Now, Bjorgolfsson is popular in this country and not only because of his strive to own the country’s telecom giant. His invasion of Bulgaria has been fuelled by other purchases, like the privatisation of three pharmaceutical plants through the company Actavis, where he is the largest shareholder. The mogul has also signed a contract and is awaiting permission from the Bulgarian National Bank to buy 34 per cent in the country’s ninth-largest bank by assets, Economic and Investment Bank (EIBank).
For those who know Bjorgolfsson better, it has been clear from the very beginning of his mission to Bulgaria that the richest Icelander would stop at nothing to make good money out of an emerging economy like Bulgaria’s. For he has already proven that his flair for profit is sound.
A cover article in Forbes Magazine earlier this year recalled that Bjorgolfsson had been one of the central figures in local news in Iceland since the mid-1980s. After his father was felled by a business scandal, Bjorgolfsson went to find his fortune and redeem the family name, thus turning into Iceland’s first billionaire.
His great-grandfather, Thor Jensen left Denmark at 15 in 1878, went on to control half a dozen or more businesses, survived bankruptcy twice and ended up as one of Iceland’s largest landowners. One son became prime minister, another ambassador to the US. A son-in-law ran the country’s largest shipping line, and a second, Thor’s grandfather, headed Shell Iceland.
Thor’s father, Bjorgolfur Gudmundsson, also enjoyed business success before the above-mentioned scandal.
Born in 1967, Bjorgolfur Thor Bjorgolfsson, better known internationally as Thor (pronounced “tore”) Bjorgolfsson, is the largest shareholder in Actavis Group, the international generic pharmaceuticals company, where he has served as a board member since 1999 and chairman since 2000.
He is a young, international entrepreneur and investor with significant interests in pharmaceuticals, telecommunications and financial services.
Bjorgolfsson chose to go to the US in 1986 rather than join the family firm, Hafskip, which was at the time embroiled in a financial scandal involving fraud and embezzlement. In 1991, he graduated from New York University’s Leonard N. Stern School of Business.
Bjorgolfsson spends a lot of time at home in London or travelling in Europe, where he has been building an ownership in telecommunication companies in Central and South East Europe during the past several years. He owns substantial stakes in Ceske Radiokomunikace, which, among others, owns 39.23 per cent of Prague-based mobile operator T-Mobile.
Among many other duties, he is a general consul of Iceland, representing his country in northwest Russia.
In fact, it was in Russia that Bjorgolfsson began his investment activities, where he was the co-founder of a Saint Petersburg-based beverages firm that later became the brewery Bravo International. His business partner was fellow Icelander Magnus Thorsteinsson, who today is an entrepreneur and investor with significant interest in aviation and financial services.
Bravo started out making premixed cocktails and drinks in a can – the so-called flavoured alcoholic beverages – with partners such as Johnnie Walker and Gordon’s Gin, reporting $20 million in 1998 sales. Later, it focused on premium beer brewing, producing several top-selling Russian brands. To boost sales and achieve rapid brand awareness by the masses, Bravo International invited 10 000 Russians to St. Petersburg’s city centre for a launch party and followed up with a major advertising campaign.
After nearly a decade of expansion, Bravo International was acquired in early 2002 by Heineken of the Netherlands, making the brewing multinational the fourth-largest brewer in Russia in terms of production volume and the country’s fastest-growing brewer. Heineken said one of the reasons for its Bravo acquisition, which placed the Dutch giant in a good position from which to pursue rapid growth in this emerging beer market, was the absence of any corruption within the acquired, foreign-owned and foreign-run company.
Bjorgolfsson used his share of the proceeds to go on a buying spree in his native Iceland and in Europe. Deutsche Bank invited him to invest in a Bulgarian generics pharmaceutical producer. He acquired Balkanpharma (now Actavis Bulgaria) in 1999, through his joint investment fund, Amber International, and later merged it with Pharmaco (now Actavis Group).
Novator (the investment fund Bjorgolfsson uses in Bulgaria now) and Amber International are two holding companies owned by Bjorgolfsson with stakes in the financial, pharmaceutical and telecommunications sectors.
He also sits on the boards of a number of companies and organisations including Burdaras (formerly Eimskip Holding), an Icelandic investment fund listed on the Iceland Stock Exchange with substantial cash resources, and of Samson Holding, an Iceland-based holding company that is a significant investor in Reykjavik-based Landsbanki Islands (the National Bank of Iceland), the country’s oldest full-service commercial bank.
Bjorgolfsson is also a leading patron of arts and culture. He is backing an Icelandic adaptation of an English interpretation of William Shakespeare’s Romeo and Juliet, which he helped produce in London’s West End and hopes to bring to New York City. It is a circus-orientated version of the classic play using acrobatic, aerobatic and clownesque techniques, all without losing the tragic fundamentals of the powerful play.
Furthermore, in October 2004, Icelandic opera and art contributed to a special programme of cultural events at Sofia University in Bulgaria. Sponsored by Actavis and Landsbanki Islands, the IceArt initiative aimed to reinforce cultural links between the two countries. Money raised at all the events was donated to the work of the International Women’s Club in Bulgaria, which promotes breast-cancer prevention, research, education and treatment.
“I got the respect I wanted. Now I can begin the second half of my life,” Bjorgolfsson told Forbes in early 2005. It appears that this second half will be closely tied to the fate of Bulgaria’s developing economy.
Thor – Iceland’s First Geyser Billionaire
Picture Thor Bjorgolfsson (right) and BTC CEO Dennis Wallach (left) at the opening of a call center of Viva Tel some weeks ago
Bjorgolfsson spends a lot of time at home in London or traveling round Europe, where he has been building an ownership in telecommunication companies in Central and South-East Europe during the last 2-3 years. He owns substantial stakes in Ceske Radiokomunikace and Netia Mobile Sp. in Poland.
Among many other duties, he is a General Consul of Iceland, representing his country in Russia.
Bjorgolfsson actually began his investment activities in Russia, where he was the co-founder of St. Petersburg-based beverages-firm-turned-brewery Bravo International Ltd. Within three years, Bravo International, Russia’s fastest-growing brewer quickly secured a 17% market share in St. Petersburg region and 7% in the Moscow area.
Thorsteinsson used some of the proceeds to acquire a 51% stake in Air Atlanta in 2002. Today, he is a board member of Actavis Group, Samson Holding Ltd. and Chairman of Eimskip. Thorsteinsson is also the majority owner and Executive Chairman of Avion Group, the Iceland-based airline conglomerate and parent to UK carriers Air Atlanta Europe and Excel Airways. The company is hoping to secure a foothold in the US, initially by taking a 19% interest in charter airline Casino Express.
Bjorgolfsson used his share of the proceeds to go on a buying spree in his native Iceland and in Europe. Deutsche Bank invited him to invest in a tiny Bulgarian generics pharmaceutical producer. He acquired Balkanpharma (now Actavis Bulgaria) in 1999, through his joint investment fund, Amber International Ltd., and later merged it with Pharmaco hf. (now Actavis Group hf.), a company domiciled in Iceland in 2000. Balkanpharma required capital to purchase several Bulgarian generics producers in an upcoming privatisation. Bjorgolfsson scrounged up USD 5.3 million by partnering with Pharmaco and his father, selling some stock and borrowing the rest. One year later, when Deutsche Bank cashed out, Bjorgolfsson helped merge Balkanpharma and Pharmaco, took over as Chairman and boosted his family’s stake. In 2002, Pharmaco concluded the sale of 80% of its Icelandic interest to newly-established PharmaNor. In the same year, Pharmaco acquired a majority share in Delta, before the two firms merged to create one of the largest companies in Iceland.
pharmaceutical company Amide.
In 2005, Actavis announced its conditional acquisition of Higia, Bulgaria’s largest pharmaceutical distributor, and a new Hungary acquisition, Keri Pharma.
Today, Bjorgolfsson wields direct or indirect control over many of Iceland’s largest listed and unlisted firms. He sits on the boards of a number of companies and organisations and is the Chairman of Burdaras hf. (formerly Eimskip Holding), an Icelandic investment fund listed on the Iceland Stock Exchange with substantial cash resources, and of Samson Holding, an Iceland-based holding company that is a significant investor in Reykjavik-based Landsbanki Islands hf. (The National Bank of Iceland), Iceland’s oldest full-service commercial bank. Established in 1885 and once operated as Iceland’s central bank, Landsbanki is a leading Icelandic financial institution with total assets of ISK 1,022 billion (GBP 8.5 billion) on June 30, 2005.
Landsbanki has spearheaded many of the new financial products and services now being offered in Iceland to both domestic and foreign businesses. In recent years, the Bank has also played an active role in numerous important developments in the financial sector, including participation in the establishing of entities such as the Icelandic Banks’ Data Centre (RB), Visa-Iceland Ltd. and Kreditkort Ltd. (EUROCARD), a principal member of MasterCard in Iceland.
In Bulgaria, Bjorgolfsson serves as the leading investor in the consortium awarded the privatisation of BTC, the country’s formerly state-owned telecommunications monopoly, and is a member of the privatised telecom operator’s board of directors. BTC, which is the main telecom operator in Bulgaria employing approximately 20,000 professionals, has 2.9 million phone installed connections and this number is still growing. With a population of 8 million, Bulgaria is one of the Central and Eastern European (CEE) countries with the highest fixed-line telephone penetration rate – 85% of all households have a telephone.
The Icelandic Billionaire First entered Bulgaria in 1999, when he was invited by the Deutsche Bank to invest in the country’s pharmaceutics industry. The Ivan Kostov-led Cabinet sold three pharmaceutical plants to Bjorgolfsson at US $16.597, instead of the prematurely negotiated price of US $24.5 million. The shares of the three plants are acquired at ten percent of their nominal value.
The newly born pharmaceutical company is named Balkanpharma and it turns into the backbone of Actavic. This strategic maneuver rocketed Thor into the billionaires’ club.
Thor Bjorgolfsson has finally decided to announce the real-term price of the Bulgarian Telecommunications Company (BTC) and to acquire one hundred percent of Bulgaria’s telecom. Through his investment fund Novator, he will fully buy out the Viva Ventures investment fund at Euro 500 million. Viva Ventures bought BTC for Euro 230 million. In its coming issues, Standart will throw light on “who is Thor Bjorgolfsson, Iceland’s first billionaire?” This misterious figure bought some of the biggest Bulgarian pharmaceutical plants in bulk; then he bought Bulgaria’s telecom and now is aspiring to buy a 34-percent stake at the EIBank. Standart will also disclose Thor’s classical scheme, which always allows him to prove financial capitalization and assets to be granted new loans for his future business projects. His success in Bulgaria is an illustative example of how one rich man can make a business breakthrough, regardless of the political orientation of the ruling Cabinet.
Next-generation Viking invasion
They’ve got the cash to buy big UK groups like M&S. But where does it come from?
Source: Ian Griffiths, The Guardian
Marks & Spencer shares rose 5p to 351.75p yesterday as investors pondered the prospect of another summer of bid speculation for the troubled retailer. Last year it was Philip Green, this year the takeover talk is focused on an Icelandic raider.
There are two or three contenders from the rock in the Atlantic but high on any list is Baugur, which has already bought a number of British high-street retailers.
By emerging as a prime contender to stalk the sick man of the British high street, the Icelandic retailer has contrived to illuminate the plight of M&S and highlight the growth of a new breed of Viking raider.
While Baugur has raced from obscurity to control a large slice of the high street, M&S has shed customers and market share. But the Baugur rise is clouded by broader, lingering questions about the underpinning of the Icelandic miracle.
If the stake in M&S is the prelude to a bid then Baugur will be following a path carved out a year ago by Philip Green. His ambitions to acquire M&S were thwarted but he has every reason to follow any Icelandic assault with interest.
It was Mr Green’s Arcadia group which indirectly whetted Baugur’s appetite for British retailing. Baugur had been the Icelandic franchise-holder for a number of Arcadia’s businesses, liked what it saw and built a 20% stake in Arcadia. Its ambitions to launch a bid ultimately failed and it ended up pledging its stake to support Mr Green’s acquisition.
As Baugur has advanced aggressively on to the high street, it has also moved into a property development venture with partners including Tom Hunter, one of Mr Green’s allies.
However, while Baugur has established links with Mr Green, more intriguing is the fact that its expansion coincides with the appearance of a new breed of slick young Icelandic businessmen who have transformed the country’s image from that of insular fisherman into one of a global entrepreneur.
That, in turn, exposes Baugur and other potential Icelandic suitors of M&S to the persistent but unsubstantiated whispering that the country’s economic miracle has been funded by Russian mafia money rather than growth and liberalisation.
It is a miracle that has allowed Icelandic businessmen to march into the British high street and the City of London, capturing assets along the way – even though Iceland’s output is about the same size as M&S’s market capitalisation. Iceland’s corporate cheerleaders have been swift to attribute their success to economic performance and dismiss the mafia money speculation as unfounded.
It is only coincidence that Baugur’s road to fame and fortune mirrors the remarkable progress of another Icelandic dynasty. Bjorgolfur Thor Bjorgolfsson and his father, Bjorgolfur Gudmundsson, have trodden a path which has seen them cast out by Icelandic financial society only to return a decade later as owners of one of the country’s largest banks.
Bjorgolfur Bjorgolfsson has become Iceland’s first dollar billionaire, and the family has created a powerful empire that takes in pharmaceuticals, telecommunications and financial services. Their long-term partner, Magnus Thorsteinsson, is the man behind Excel Airways.
In 1993, the three men embarked on a fascinating journey to St Petersburg, Russia. There they helped form the Baltic Bottling Plant. Ownership of that company would later be challenged in the courts but away from the legal battles and recriminations, the Icelanders sold the plant to Pepsi and used the proceeds to move into the brewing business, with the launch of Bravo International.
It was 1998, the same year that Baugur was formed. It had grown from the single value-for-money Bonus store set up by the modern Baugur figurehead Jon Asgeir Johannesson and his father in Reykjavik in 1989. When Bonus merged with Hagkaup, a long-established Icelandic retailer, in 1998 Baugur was born.
But while Baugur set its sights on the Faroe Islands with the acquisition of 50% of the six-strong SMS supermarket chain, Bravo International was headed for more turbulent waters. The move into brewing was bold. The Russian economy was in crisis and foreign investment drying up.
Yet the Icelanders were not only ploughing money into the country but doing it in the city regarded as the Russian mafia capital. That investment was being made in the drinks sector, seen by the mafia as the industry of choice.
Yet against all the odds, Bravo went from strength to strength.
Other St Petersburg brewing executives were not so fortunate. One was shot dead in his kitchen from the ledge of a fifth-floor window. Another perished in a hail of bullets as he stepped from his Mercedes. And one St Petersburg brewery burned to the ground after a mishap with a welding torch.
But the Bravo business, run by three self-confessed naives, suddenly found itself to be one of Russia’s leading brewers. In under three years it became the fastest-growing brewer in the country. It secured a 17% market share in the St Petersburg region and 7% in the Moscow area. It was selling 2.5m hectolitres of beer a year in 2001 and heading for 4m when Heineken of the Netherlands stepped in to buy it for $400m in 2002. Heineken said one of the reasons for the Bravo purchase was the absence of any corruption.
With cash in their pockets, it was time for the three men to return home and make their most audacious bid yet: the acquisition of Landsbanki, Iceland’s second-largest commercial bank and once the country’s central bank.
That acquisition represented a poignant return to the banking sector by Bjorgolfur Gudmundsson. In 1991 he had been sentenced to 12-months’ imprisonment, suspended for two years, for his part in the Hafskip shipping collapse. Most of the charges against him had been dropped and he has described the remaining charges as technicalities.
But given that the Hafskip affair resulted in the enforced rescue of the Fisheries Bank, his reappearance on the board of Samson Holding – the vehicle used by him, his son and Mr Thorsteinsson to acquire Landsbanki – caused a stir in Icelandic banking circles.
The deal in late 2002 coincided with the start of the Icelandic miracle. In a prophetic interview in November 2002, Bjorgulfur Thor Bjorgolfsson saw potential on the international horizon. “Landsbanki is a tiny bank by international standards but nevertheless a footprint to grow from.”
With small operations in London, Guernsey and Luxembourg, an international template was in place. But in 2002 it was not obvious that the Icelandic miracle would be led by a booming economy.
Indeed, the economy slipped into mild recession that year and the stock market was only just recovering from the traumas of the global crash that had seen values halve from their February 2000 peak.
In mid-2002, the ICEX-15 index of leading stock was hovering around the 1,300 level. Today it is trading at over 4,000. That is an improvement of almost 300%. It is also well over double the pre-crash high of 1888.7. This dramatic improve ment in stock prices has improved confidence and sentiment. Certainly, the latest figures for foreign direct investment in Icelandic stocks produced by the Central Bank of Iceland in December indicate a new enthusiasm in some foreign quarters.
Guernsey, for instance, which made no direct investment in Icelandic stocks from 1998 to 2001, began to take an interest in 2002. Some 5.6bn Icelandic krona flowed from the Channel Island in 2002; that more than doubled in 2003 to IKR11.6bn.
Luxembourg, which is grouped with Belgium in the bank’s analysis, also registered increased funds flowing into Icelandic stocks. The IKR4.4bn recorded in 2000 rose to IKR10bn in 2002 and leapt to IKR25.2bn in 2003. That made it the biggest investing country in Iceland, surpassing the IKR14.7bn ploughed in by the United States, almost half its 2001 level.
Rising stock prices have helped underpin the increasing visits that Icelandic companies and financial institutions have made to the international capital markets to fund their expansion.
The Baugur experience illustrates how the miracle began in earnest in 2002. Having failed to make a successful bid for Arcadia, selling its stake to Philip Green, it embarked on a new strategy in late 2002.
It bought a strategic stake in the Big Food Group, the Iceland frozen foods chain business it now owns, in October 2002. Further strategic stakes have been taken in Somerfield and LXB, the property development group in which Tom Hunter is a co-investor. Baugur has become a regular dabbler in other retail stocks, and has bought the likes of Hamleys, Goldsmiths, Oasis and Karen Millen.
Icelandic predators bought £26m worth of British companies in 2002. That figure had swelled to £894m last year.
With a market capitalisation approaching £6bn, a successful bid for M&S would represent the biggest fish the Icelanders had ever landed.