The target is a Finnish valve maker, Neles Oyj, in which Cevian owns over 10 percent. The investor has thrown its backing behind a takeover offer from Swedish industrial giant Alfa Laval AB. But behind the scenes, Finnish rival Valmet Oyj has been buying up stock.

On Thursday, it raised its stake in Neles to above 20 percent.

Christer Gardell, managing partner at Stockholm-based Cevian, says “the only way that Valmet can be certain of blocking the takeover is by either presenting a superior alternative or by going above 30 percent, which would force them to launch a bid on the entire company.”

A spokesperson for Valmet reiterated the company’s stance that it wants to be a long-term, active shareholder in Neles. Alfa Laval said last month it intends to take over Neles in a deal that represents a 33 percent premium relative to the share price it traded at before the offer was announced. The Swedish company needs two-thirds of Neles shares to force through its takeover.

Sweden’s Alfa Laval Agrees to Buy Neles in USD 2 Billion Deal But Gardell said there may be another way to squeeze out Valmet. “It’s not uncommon in situations like this to see the bidder dropping the acceptance threshold to 50 percent,” he said. Alfa Laval declined to comment.

“If we change anything connected to our offering, we will of course publicly announce that to the market,” said Peter Torstensson, a spokesperson for the company. According to Joonas Ilvonen, an analyst at Evli Bank, “Valmet’s interest in Neles is strategic. They seek to own a significant minority to safeguard the deliveries of certain valves for their pulp and energy machinery.”

Valmet said it has no such concerns, noting customers mostly purchase the valves they need directly from the producers.
“It’s not clear what the best option for Valmet shareholders would be,” Ilvonen said. “But it appears acquiring all of Neles wouldn’t make sense.” The board of Neles has unanimously recommended that shareholders accept Alfa Laval’s offer, which Cevian has already committed to do (Cevian’s representative on the board did not participate in the decision to recommend the offer).

The acceptance period under the tender offer started on Aug. 13, and expires on Oct. 22. “A month has passed since Alfa Laval’s offer was announced, but Valmet has still not presented Neles’s shareholders with a credible alternative,” Gardell said.