Will foreign governments be buying American companies?

The Financial Page
Sovereign Wealth World
by James Surowiecki

Another excellent essay from Surowiecki (link above). Living in Sweden, it is always fascinating to me that the “Kingdom of Sweden” owns some 250 for-profit companies, including Absolut Vodka, one of the top 10 spirits brands in the world in sales; it is remarkably efficiently run, and while the government is speculating on selling it to convert it to cash and ease the government into owning fewer assets, the truth is that despite Absolut being a government-owned company, it has defied the free market cynics and performed phenomenally — perhaps better than it might have were it publicly traded or privately held. When I asked the Chairman whether he would recommend selling the company now as the government intends to, were it not now owned by the government, he speculated that it would be unwise to sell. Basically, the company performs so well and generates so much cash flow that it has no strategic reason to sell, and it is possible that the highest bidder out there will not be paying what the company is really worth. Ironic, or simply a vindication for the free market cynics, that Absolut will likely be sold for political, rather than sound business reasons, at a price less than it might have been worth were it not owned by the government? A red herring of mine, as this article is about the implications of foreign governments buying private or publicly traded American companies . . .


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