Battle of Belgium
It is a battle royal, and it foreshadows many more like it in the struggle for the economic mastery of Europe. The prize is the Société Générale de Belgique, a large and history-laden enterprise. Its headquarters, in the heart of Brussels, lies between the seat of government and the royal palace; at the age of 166, it is older than the Belgian state and has often seemed more powerful. It has more than 1,200 subsidiaries, in sixty-seven countries, and reputedly a stake in one-third of the Belgian economy, including finance, fuel, engineering, chemicals and diamonds. Its consolidated assets were estimated to be $3.6 billion at the end of 1985.
Since the beginning of this year the value of its shares has more than doubled. What triggered the spectacular rise was a takeover bid by one of those latter-day condottieri for whom the frontiers of the nation-state are too confining, Carlo de Benedetti. Based in Italy, de Benedetti, in addition to being chair of Ing. C. Olivetti S.p.A., the office equipment group, has interests in engineering, foodstuffs (Buitoni) and publishing (Mondadori). But two-thirds of his business is now carried on abroad. In France, for instance, he has a stake in engine components as well as in haute couture (Yves St. Laurent), and it is through his French subsidiary Cerus that he made his bid for the holding company in Brussels. The confrontation surfaced in the press on January 18. The previous evening, de Benedetti had told the governor of the Générale that he owned 18.6 percent of its voting shares and would make an open bid for another 15 percent, sufficient to give him veto power and probably effective control. The Générale tried to dilute his holding by issuing 12 million additional voting shares, a move later declared illegal by the Brussels Commercial Court.
Meanwhile, a rescue operation for this temple of Belgium’s French-speaking establishment was being mounted, ironically, in the Flemish part of the country, by a consortium headed by the Gevaert N.V. holding company. In the hectic bidding that followed, a French holding company, the Compagnie Financière de Suez, emerged as the third major player. Last week, it looked as if Gevaert, holding 28 percent of the shares, and Suez, with 15 percent, might gain an absolute majority, but their ailiance collapsed. Now de Benedetti, controlling close to 40 percent, seems the likely winner, although all sorts of deals are still possible. The only certainty is that the old Société Générale is no more.
Some lessons can be drawn from this unfinished battle. For Belgium it marks a clear shift in economic power from the once-dominant Walloon area to the more dynamic Flanders; the plebeian sharks are takmg over from the patrician predators. It also reminds us that last October’s financial collapse has rendered many firms vulnerable to takeovers. But since many professional raiders lost money in the debacle, takeover bids may now resume the more traditional form of the mighty swallowing the not-quite-so-strong. Third, with the dollar down, international investment is no longer one-way traffic from Wall Street to Europe. The abortive bid of Switzerland’s Hoffmann-La Roche for U.S.-based Sterling Drug and the current rumor that British publisher Robert Maxwell is trying to take over Houghton Mifflin are the latest reminders of that trend. Which brings us to the crucial point. The main reason for Signor de Benedetti’s move, and for recent maneuvers in the communications and insurance industries, presaging many battles to come, is that by 1992 the European Economic Community is supposed to be a truly unified market. When the Common Market was set up thirty years ago, the half-jocular comment was that only the Americans were treating it as a single unit. By now the European tycoons, too, seem to be thinking the same way and expanding their takeover activities accordingly.
There is still another moral to this story. Capitalism, its protagonists have been telling us, has become more humane, has grasped that “small is beautiful.” In fact, it has simply discovered that sometimes smaller plants can be better managed and that farming out production need not diminish exploitation of workers. Meanwhile, financial concentration never stopped, and it has now reached a new stage in Europe. To borrow from Brecht, the era of small thieves is over. Robber barons are fighting it out, hoping that the winners will be big enough to take on their American and Japanese partners or rivals.