Nationalism's role in battle over Belgium's biggest company

Belgium's largest holding company, an industrial giant that is an important part of the country's history and identity, is in the midst of a takeover battle involving court challenges, media battles, and nationalism. On Monday, Gevaert SA, a Belgian financial group whose best-known unit is Agfa-Gevaert photographic films, launched a bid to buy 25 percent of Soci'et'e G'en'erale de Belgique, Belgium's biggest company.

The move is the latest twist in the fight for Soci'et'e G'en'erale. Until Gevaert's bid, the company had been in the throes of fighting off a takeover by Carlo De Benedetti, the Italian financier whose interests range from personal computer giant Olivetti to pasta producer Buitoni.

The Soci'et'e G'en'erale is an an industrial and commercial holding company with stakes in 1,267 companies worldwide, including steel, insurance, banking, energy, and telecommunications. The company is so entwined with Belgium's history (the company was founded by the king of the Belgians 167 years ago), its political power, and its economy that it is often called Belgium's ``shadow government.''

That is why Mr. De Benedetti's bid for effective control of the company is regarded by its governor, Ren'e Lamy, as nothing short of ``an imperialist move.'' News of the Gevaert bid was welcomed by Soci'et'e G'en'erale. ``We have agreed in principle with the policies proposed by Andr'e Leysen,'' a spokeswoman for Soci'et'e G'en'erale said. Mr. Leysen is the chairman of Gevaert.

But in a press conference Jan. 22, Viscount Etienne Davignon, who is on the Soci'et'e G'en'erale's board of directors, said, ``What we are contesting is that a single shareholder should wield all the power. We are not contesting because he is Italian. It would have been the same if the raider were of any other nationality.''

The welcome given to the Gevaert bid seems to contradict this statement. Mr. Lamy's comments on the same day were widely seen as too nationalistic. There are 279,000 Italians in Belgium. They form the largest minority group of the country's 10 million inhabitants. ``Most of them work in the service industry,'' one observer commented, ``and the Beligans don't like the thought of an Italian running their biggest company.''

News that De Benedetti had acquired an 18.6 percent stake in the Soci'et'e G'en'erale had emerged Jan. 18. In Belgium, there is no law requiring a shareholder to identify himself, no matter how large a stake he acquires in a company.

But on Jan. 17, De Benedetti told Lamy that he intended to make an offer for a further stake to take his total to 25 percent. The same evening, Soci'et'e G'en'erale announced it would issue 16 million new shares into friendly hands. Gevaert has offered to buy 8 to 10 million of these shares. The capital increase would have the effect of diluting De Benedetti's holdings.

But in recent weeks, the Brussels Commercial Court has twice judged the controversial capital increase illegal. The court ruled that the shares do not have voting rights and has forbidden Soci'et'e G'en'erale to sell them to third parties.

The company claims the shares were legitimately issued and transferred to Sodecom, a unit of Soci'et'e G'en'erale. Sodecom has not begun placing these shares, and Soci'et'e G'en'erale launched court action last week to get permission to place them. The court has not yet made a ruling, so Gevaert's offer remains theoretical.

In September, an extraordinary general meeting in Soci'et'e G'en'erale's palatial headquarters voted to allow management to issue up to 16 million new shares when necessary. The move was made in the wake of heavy summer trading in shares of ``Reserve,'' as the holding company is popularly known. Rumors had abounded throughout the summer as to the identity of the ``raider.''

De Benedetti, however, claims the decision to move into the Soci'et'e G'en'erale was made only in January. ``I have a grand European project, and this is the reason we took the decision on Soci'et'e G'en'erale,'' he said.

He says he wants to build a giant European holding company, which would allow him to take full advantage of the single European market which the European Community (EC) is planning to achieve by the end of 1992. The single market would allow free movement of capital, goods, people, and services between the EC's 12 member states.

De Benedetti is now waiting for a decision by the Belgian Banking Commission, which will rule whether he can go ahead with his offer for the remaining 6.4 percent of the shares he needs to take his total to 25 percent.

In a meeting last week with Mark Eyskens, Belgium's acting finance minister (the country still has no government following an indecisive election Dec. 13), De Benedetti promised not to increase his share beyond 25 percent. But he later said he wanted a decisive say in the running of the company, as ``predominant shareholder with a position of control.''

In a television interview, De Benedetti said the company's current shareholders should decide its future. He said the company's recent records showed profitability to be ``modest,'' growth ``miserable,'' and management ``very feudal.''

But, he stressed, although there would have to be some changes in the holding company, ``I am not a predator, I am an investor, a builder.'' He questioned the extraordinary reaction by Belgian financial and political circles to his takeover bid. ``Is Belgium going to build Europe, or submit to it?'' he asked. The reaction to his bid, De Benedetti said, was a classic example of ``the past confronting the future,'' and pointed out that if he had been able directly or indirectly to acquire 18.6 percent of the shares, ``it's because somebody wanted to sell them.''

Gevaert chairman Leysen would not say which other companies are in the group formed to launch the counterbid, just that they were Belgian and European.

There are now three actors on stage. But none can make any more moves until decisions are taken both by the court and the Banking Commission. These are expected on next Tuesday.