Holger

"The dairies did not buy the machines, but rented them for a relatively low cost. Tetra Pak made money instead by charging production royalties and by requiring customers to commit to only buying Tetra Pak’s specially treated paper. When the contracts were drawn up, Erik Torudd wanted a clause that would force customers to pay triple royalty if they used someone else’s paper. However, Holger considered it unnecessary, as Tetra Pak could always sell its paper as cheaply as any competitors. Torudd protested, fearing that paper mills would soon gain access to Dupont’s coating method and start producing equivalent paper on their own. He argued that it wasn’t certain that Tetra Pak would be able to withstand the competition and since the paper was the company’s major source of revenue, it would ultimately threaten the operation. But Holger had Ruben on his side. “Yes, yes, that’s enough for us to take back the machine if there’s any cheating,” Ruben commented. “Are you really willing to take back the machine if it means a whole city then has no milk distribution possibilities?” asked Erik Torudd, who did not believe Ruben was serious. “Of course,” Ruben replied. It turned out as Ruben had said. What Tetra Pak committed to in return for the stringent contract terms was a reliable service organization. It was a factor whose importance could not be underestimated. For a dairy, it would be a minor disaster if the machines came to a stop and the milk spoiled. Tetra Pak promised to quickly fix any faults or immediately supply replacement machines. This unique service would later become one of the company’s most important selling points, if not the most important. Once Tetra Pak had gotten the machines into the dairies, the retailers were the key group, as a retailer convinced that the tetra was much easier to handle would soon stop buying bulk milk for their stores. But Tetra Pak also had to try to overcome consumers’ resistance to buying, since enough protests from consumers could potentially push the dairies to revert to delivering only bulk milk or glass bottles."

"Åke Gustafson and his colleagues had completed their prototype machine for manufacturing square packages. The new package, which Gustafson and his colleagues had been working on day and night, had now been named Tetra Brik. Åke Gustafson was satisfied and proud of what they had accomplished. They had solved a task that many within the company considered completely impossible. Soon, the Brik machine would be demonstrated for the technical director, also vice president, of Dairy Central, Ragnar Benedictsson. Ruben and Holger, who were strongly pressured to get the new machine on the market, gave Gustafson detailed instructions on what should and should not be said. “If he asks when the machine can be ready for dairy operation, you must say ‘in two years’,” Holger informed him. Gustafson kindly replied that he could not do that, as it was impossible to have it ready in such a short time. “Benedictsson and I have had a very good relationship with each other. It has been based on honesty and I do not intend to change that now.” “You do not understand this. It’s about business. You have to say that you can be ready in two years,” Holger replied in a stern tone. Ruben agreed by nodding. Gustafson bent, but did it under sharp protest. “I will do it, but at the same time, I will ask to resign. Not with immediate effect, but as soon as I consider the Brik system functional, I will leave,” he clarified for them. It did not seem as though either Holger or Ruben took it seriously."

"One of the company’s largest expenses was paper purchases. Ruben decided that no invoice from the paper mills would be paid within the stipulated 30 days. Instead, the supplier credit would be extended as far as possible. But there were no negotiations with the paper mills, especially involving Billerud and Uddeholm, but entirely a unilateral decision on Ruben’s part. After he had decided how the financing would be managed, he drove the line to absurdum. Payment times would, entirely in accordance with Ruben’s tactics, sometimes amount to eleven months. Holger, who was a much more sensitive person than Ruben, found the situation uncomfortable and wanted Ruben to change his mind. Invoices should be paid on time, was Holger’s firm belief. But he gained no listening at all from Ruben. “It’s only natural that they contribute to the payment, since we’re increasing their market. They haven’t been very good at that themselves,” claimed Ruben. Ruben’s reasoning was correct to the extent that the conservative Swedish paper companies were terrible at creating new markets themselves. It was also entirely correct that Tetra Pak gave the paper mills a huge sales boost. But despite everything, it is customary to negotiate supplier credits. That’s what the paper mills believed, too. However, Ruben was not at all ashamed that Tetra Pak did not pay a single invoice on time. Instead, he only said the same thing to them as he said to Holger. “You are obliged to help with our financing since we are expanding your markets.” When the paper mills’ managers found no understanding from Ruben, they instead turned to Holger who suffered and was ashamed. “You must understand that I can’t do anything. Ruben has decided that this is how it should be, and I can’t influence him,” Holger was forced to say. The paper mills were caught in a catch-22. Even though they wanted to get their money, they knew they couldn’t push Tetra into bankruptcy. Then there would be no money at all, as the company had virtually no assets. Another important creditor was the construction company ABV, which voluntarily gave very long credits to Tetra Pak’s new factory facilities. The rapidly growing business required almost constant construction of new premises. Without ABV’s willingness to extend credit, it probably wouldn’t have been possible for Tetra Pak to expand as quickly as it did. But it wasn’t just loans and credits that financed the development of Brik. Since the aseptic package hit the market, fantastic sales successes were noted. Mainly, the system was sold in developing countries – exactly as planned. In a short period, the company brought in – for that time – enormous sums. But the expansion also cost."

"But when negotiations for new loans began, he was still cold. He argued that Ruben and Holger themselves were to blame for the hopeless situation they had put themselves in. They had started the companies without any capital of their own. Now, Marcus Wallenberg argued that there were only two possible ways out for them: either to list the group on the stock exchange or to sell off a part of it."

"While Ruben showed great satisfaction in finally having removed Holger from the circle of owners, he was also relieved that he wanted to stay on the board. He knew Holger’s good name meant a lot for the opportunities to take up new loans at Tetra Pak. He therefore quickly wrote to Marcus Wallenberg to inform him about the stock takeover, but also to emphasize that Holger would remain on the board. “A limited cooperation will therefore continue, which I am pleased to see,” he wrote in the letter. With the purchase of Holger’s shares, only one step remained for Ruben before the plan for a family-run empire, with his sons as the sole owners, could be realized: he had to remove the remaining six small owners. Therefore, he soon made deals with Torsten Jeppsson and Erik Wallenberg. They sold their shares at nine times par. Harry Järund, Gunnar Brime, and Erik Torudd, however, resisted the Rausing buyout proposals. None of them wanted to sell at the price Ruben had proposed. Erik Torudd did not want to sell at all. Not at any price."

"The statement was completely made up. In fact, Tetra Pak was utterly unsellable since it did not have a developed method to show. Holger couldn’t believe his ears when he heard what Ruben said. Ruben had made a big blunder. Marcus Wallenberg fully understood that as the company was, Ruben and Holger would never get a penny for it. The argument backfired on Ruben himself, as Marcus Wallenberg thought it was ridiculous and only showed that Ruben was desperate for more money for operations. And if there’s anything that triggers alarm bells for an experienced banker, it’s when someone reveals their desperation."

"Meanwhile, Hans had to deal with his father, who was the working chairman of the board for both Tetra Pak and Åkerlund & Rausing. He had great respect for both him and Holger, but most of all for his very determined father. Hans did nothing without first getting his father’s approval. In fact, both he and Gad were much more dominated by Ruben than any outsider could guess. Neither of them made any decisions without first consulting Ruben’s opinion."

"“It was unfortunate that I mentioned Lomma to Hans Rausing because he panicked and now he is running around here or calling and tormenting me several times a day. It’s almost like I can feel my old ulcer,” complained Hilding Borstam who didn’t quite understand Hans’ hysterical reaction. In the confused situation that prevailed, Hans came to the conclusion that the company had to launch a massive advertising campaign specifically targeting the households in Lomma. It was the only way to avoid a stinging defeat, he argued. He nagged intensely at Holger and Erik Torudd. The two of them, with the right of age and experience, had much more ice in their stomach, however, and managed to slow him down. At Erik Torudd’s initiative, they instead began to work the market “from the back.” By filling the newspapers with positive letters to the editor and persuading the journalists to do interviews with the city veterinarian of Lund about the hygienic advantages of tetrapacks, they would win the households over to their side. The tactic was that it would be better to knock out bulk cream with clean weapons rather than trying to manipulate consumers through an advertising campaign, which would likely be seen through. If the tactic of getting the press on their side succeeded, it would all look much more elegant and could be used in later marketing. A few weeks later, it became clear: the tetrapack was on its way to eliminating bulk sales. Tetra Pak had managed to turn the opinion and the company management could breathe easily. This time."

"Ruben was relieved when he left the Grand. He had gotten Torudd to promise support for Hans. Perhaps it meant that Hans was saved. Inside, he was sure that Hans was the right person as CEO. Only if he matured before Holger decided to definitively remove him. It was crucial that he got a chance to show his qualities."

"Since they could not showcase any reliably functioning machines, they would no longer sell milk packaging. Instead, they would initially focus on what they could pack: cream and ice cream. The idea was that once there were finished machines for milk, the dairies would voluntarily switch to them, having seen how well the cream machines worked. The problem was just that the cream packaging had not yet been approved by the American health authorities. That was the first battle Holger would have to fight."

"If anyone doubted who held the real power in the company, all doubts were dispelled at the board meeting the following month. Although the CEO, Hans, was present, it was Holger who presented the balance sheet and budget. It was a symbolic act whose value should not be underestimated. The business world is filled with symbols intended to mark the status of various individuals in an organization. It can involve the size of the office, whether or not there is a sofa group in the office, leather upholstery in the company car, and so on. But one of the most critical signals is who in the board reports on the financial figures. If someone other than the CEO, who is directly responsible for financial management, does it, it is a way to indicate that the CEO is really just a figurehead. This was now the case within Tetra Pak."

"Ruben thus decided to give the two young men the option to buy into the company. They would be allowed to do so as soon as he had gotten rid of the troublesome Erik Åkerlund. Now was the time. Holger was appointed deputy CEO and deputy chairman of the board and got to buy 20 percent and Börje Svenby ten percent of the shares in the company. Six years later, when Svenby switched to PLM in Malmö, Holger and Ruben divided his shares. Eventually, Holger owned 25 percent in Åkerlund & Rausing."

"“It’s damn like talking to a fish,” Torudd thought. Although Torudd did not know it, the harsh words took effect. Hans realized that this time it was serious. He contacted Ruben and Holger. In the evening, the three gathered for a dramatic meeting. They agreed that Gad was not up to the role as head of paper production. Ruben, with his dynastic ambitions, was shaken by how serious the situation was. That one of his sons, born with such good prospects, would fail so spectacularly was something he could never have imagined. But there was only one possible decision if they wanted to save Tetra Pak – even Ruben realized this: Gad could no longer be involved with production. Formally, he remained on the board and retained the title of vice CEO."

"They also did not want to list any of their other companies on the stock market, since Tetra Pak’s poor finances had also dragged down their value. Thus, they would not be able to raise enough money from an IPO of them either. Eventually, they concluded that the only thing they could do was to sell Åkerlund & Rausing and thereby save Tetra Pak, at least for a while. For Ruben, deciding to sell Åkerlund & Rausing was relatively easy. On one hand, he was most interested in working on new projects, on the other hand, Holger had closed the company’s cashbox for Tetra Pak. Ruben simply could not withdraw more money from Åkerlund & Rausing to finance the further development of Tetra Pak. Another major contributing reason for deciding to sell Åkerlund & Rausing was that they had noticed that the company’s revenue curve had begun to flatten out. The company had been first in the market with disposable paper packaging and had thrived in the rapidly growing market. But now there were several competitors, and the market was largely cornered. Holger and Ruben had no choice. Enskilda Banken was pressing them through CEO Marc Wallenberg, Marcus Wallenberg’s eldest son. He refused to lend more money to Ruben’s and Holger’s company. Instead, he demanded that they find money elsewhere."

"But a very important person had not been present at the meeting: Ruben. The recent developments, with both sons away from the real power, had taken too much of a toll on him. He couldn’t bear to also hear Holger identify the Rausing family as one of the scapegoats, but he understood that he had no choice in the current situation. He had to let Holger continue, at least for now. It required someone with more experience and significantly firmer grip than Hans to straighten out the company. But this did not mean that he had to witness the family being publicly disavowed."

"When 1955 was over, Tetra Pak’s balance sheet total – the sum of debts and equity – amounted to 6,038,382 kronor, of which 6,027,611 kronor were debts. The turnover was at 6,336,633. In the heavily manicured annual report, an operating profit of 48,579 kronor was recorded. In reality, it was about a loss of one million kronor. But the loss was dribbled away by allocating certain expenses to Åkerlund & Rausing’s annual report. The costs for machine development were borne by Östanå, a paper mill that Ruben and Holger had bought during the Second World War. It was only in the closed rooms of Tetra Pak and Åkerlund & Rausing that the real figures could be discussed. This way, they avoided having anxious creditors running in the corridors. And anxious they would have become if they realized the company’s escalating costs."

"Holger explained to Ruben that he would gladly keep his shares in Tetra Pak if he gained control over the company’s cost development, was freed from his guarantor liability, and was not forced to invest more money. This would be written down in a new agreement between the families. In a letter, he also suggested that the period for redeeming the shares should be temporarily extended to December 16 that same year unless a new collaboration agreement was reached beforehand. However, Ruben preferred not to see a new agreement and therefore ignored the letter. He had made up his mind: there would not be a new agreement that limited his freedom of action. The only thing he was interested in was delaying the development until the Rausing family had received the money from the sale. Then Holger would be thrown out of Tetra Pak."

"When Ruben showed them what he and his energetic employees were working on, all three became enthusiastic and encouraged him to further develop the idea. It became a very important spur for Ruben. He had already been convinced that they were on the right track. But now, when he also received confirmation from people who did not work within the company, he became completely sure of his case. At the same time, he realized, in a moment of humility, that he could not do it without Holger, Torudd, Järund, and Erik Wallenberg. What he himself would take care of was the financing, his strong side. He was aware that he was about to take on a heavy, but completely necessary task. If it were to work, he had to build a tightly-knit team, where all members truly believed in the task. He decided to test the commitment and distribute the responsibilities at the next company dinner."

"Ruben had notably poor hearing. And since he did not mention this to people, they did not raise their voices when speaking to him. Consequently, Ruben’s responses and statements during the negotiations were sometimes nonsensical, which gave the American conversation partners a very strange impression. Holger often shook his head sadly during the stay in the USA. “This is a disaster. Ruben should never have gone on this trip,” he said grimly on a couple of occasions."

"At the beginning of August, when Holger gradually took over major parts of the executive power, Ruben began to realize that his dynasty building was seriously cracking at the seams. If Hans disappeared from the CEO position, it also meant that it was the end of Ruben’s real power in Tetra Pak. It was a situation that he could never, not even in his wildest dreams, have imagined. What would remain was the influence in the board, which could be quite important, but would mean that he could no longer interfere in the operational activities. Since Ruben wanted to approve all decisions, big and small, such a development was a pure nightmare for him."

"To maintain real control over a company, simply owning it is not enough. One must also have executive power in their hands – without it, the influence is limited to what is decided in the boardroom and at shareholders’ meetings. If the Rausing family did not have someone in the CEO position, they would no longer have total control over the operations. Especially since Holger had a controlling stake in the company and could thus block decision-making. But Ruben had no choice: if Holger did not take over the actual management of Tetra Pak, it was not only the dynasty building that would crumble, but the entire life’s work: Åkerlund & Rausing, Östanå, and Tetra Pak."

"However, even though Ruben managed to calm Marcus Wallenberg, Holger and others in the corporate management began to worry even more. Costs were escalating significantly and the organization was functioning worse and worse. It didn’t seem like Ruben saw what was happening. With his extravagant nature, he had neither the interest nor the patience to engage in more mundane tasks such as controlling the economy or monitoring cost and revenue development."

"Holger realized that he had the necessary support from the board members who were not part of the Rausing family to demand what he needed to save the company. Therefore, he requested that the executive committee should be superior to the CEO and not be on equal terms with him. “Otherwise, we will never get any order and clarity in the business of this company,” he clarified firmly."

"They found the solution in 1962 in the United Kingdom. Through their contacts, Ruben and Holger managed to get the British insurance company Royal Insurance to lend 15 million kronor for twenty years. But to secure the loan, they were forced to ask their plastic supplier ICI to provide a guarantee. Against the guarantee, ICI received exclusive rights to polyethylene deliveries to Tetra Pak. Of the 15 million, formally, eleven went to Åkerlund & Rausing and four to Tetra Pak. In reality, most of the money went directly or indirectly to Tetra Pak."

"They found the solution in 1962 in the United Kingdom. Through their contacts, Ruben and Holger managed to get the British insurance company Royal Insurance to lend 15 million kronor for twenty years. But to secure the loan, they were forced to ask their plastic supplier ICI to provide a guarantee. Against the guarantee, ICI received exclusive rights to polyethylene deliveries to Tetra Pak. Of the 15 million, formally, eleven went to Åkerlund & Rausing and four to Tetra Pak. In reality, most of the money went directly or indirectly to Tetra Pak."

"Before he left for the USA on the negotiation tour, he sat down and carefully analyzed how it should be set up. His deliberations led to Tetra Pak’s entire USA strategy being changed. Instead of acquiring someone who could sell the machines under license, they would instead try to sell them to the dairies themselves. Additionally, they would acquire a number of companies that would manufacture the paper under license. Due to the stringent American antitrust laws, having just one paper supplier for the dairies was not enough, Holger assessed."

"“Yes, yes. That’s probably the price one has to pay for having and having had a competent CEO,” Ruben said resignedly after the negotiations. However, Ruben recovered relatively quickly from his depression. After just a few months, he began to realize that he didn’t have the money it would cost to buy Holger out of the companies. He thought it was just as well that the agreement looked the way it did. If everything developed as he planned, Tetra Pak would soon start to yield substantial profits and then he would be able to earn enough money to buy Holger’s share. In his very special world of thought, he began to see the agreement as an ideal settlement. He was sure that Holger would voluntarily divest the shares after five years. This would finally allow Hans and Gad to take over the conglomerate completely."

"The moral dissipation had actually begun at the top, when the conflicts between the Rausing family and Holger were ongoing, and then spread down to the employees on the floor. The staff’s uncertainty about the company’s policy was largely due to all the investments made in projects that were depicted as the company’s future at a very early stage. After a while, these projects were discontinued, which created a very poor atmosphere among those involved."

"Now Holger could start cleaning up the organization for real. The first action was to put Hans and Gad in their place. “Tetra Pak is bankrupt. It is now under administration. And decisions about expenditures can from now on only be made by me,” he informed them in brusque terms. He was right. The company was ready for bankruptcy if any of the creditors demanded their money back. In fact, since 1956, the company had been obligated to prepare a balance sheet for checking, but they had ignored it so that no outsider would see how badly off it was. “If Hans had not been a son in the house, he would not have stayed another ten minutes,” Holger told Erik Torudd."