In Mexico City, most businesses require at least two telephones. Reason: there are two companies, Mexican Ericsson Co. and Mexicana Telephone & Telegraph Co., and their switchboards do not connect. Last week, a $49 million merger was completed to end this inconvenience. The new combination would be called Telefonos de Mexico, S.A., and an old hand at empire-building hoped that it would make him Mexico’s telephone king. The man: Sweden’s famed Axel Wenner-Gren, 66.
With a Viking’s daring, blue-eyed Axel Wenner-Gren founded the Swedish-Electrolux Co. in 1919 and girdled the world with its subsidiaries. Before long, he also controlled the Swedish paper-pulp trust. He bought out Krupp’s interest in Sweden’s Bofors antiaircraft gun, and started a military airplane plant to make the things the guns shoot at.
When World War II broke out, he was worth an estimated $50 to $100 million, and he had great & good friends on both sides. For Old Friend Hermann Göring, he acted as a go-between in the Russo-Finnish war and helped work out a truce. For Old Friend Edward, Duke of Windsor, he provided his 320-ft. yacht Southern Cross (once owned by Howard Hughes) to take the Duchess from Nassau to Florida to have an infected tooth removed.
Razor Blades & Babies. He was visiting Mexico in 1942 when the U.S. and Britain put him on their economic black list (TIME, June 29, 1942). This shut him off from his Swedish empire, but he fortunately made an influential new friend, the late Maximino Avila Camacho, enormously rich and powerful brother of then-President Manuel Avila Camacho. Wenner-Gren also had some spare change with him, $1 or $2 million. With Maximino’s help he put the money to work.
He turned his yacht over to the Mexican navy (then at war), but he opened a de luxe delicatessen with the delicacies from its commissary. To provide employment for the staff of his Mexican Electrolux branch, he set up a factory to make silverware, which was sold from door to door.
He bought Cuernavaca’s Hotel Chula Vista, opened a decorating shop and a furniture factory, dabbled in real estate, bought interests in banks and insurance companies. He made electric appliances and started a razor-blade factory. He brought powdered milk from Wisconsin, mixed it with water and sugar, and sold it as a milk for Mexican babies. By last year, when the black list expired, he had grown very fond of Mexico, and of his growing empire there.
Telephones & Targets. Wenner-Gren’s telephone deal was almost as involved as the financial matchwork conceived by his late countryman Ivar Kreuger. Since Sweden’s tight currency controls will not let Wenner-Gren export more than 2,200 kroner ($600) a month, he had to make the deal through a swap.
The $38 million Mexican Ericsson Co. was owned by Sweden Ericsson Co. Wenner-Gren got it by swapping some of his Swedish securities. With Mexican Ericsson, he got its 49% ownership of the rival Mexicana Telephone & Telegraph Co. The other 51% of Mexicana is owned by International Telephone & Telegraph Co. (see above). For that, Wenner-Gren agreed to pay I.T. & T. some $11 million, raised by selling other Swedish holdings and using U.S. dollars earned by his stock in Servel, Inc. (refrigerators) and Electrolux Corp. (vacuum cleaners).
To control both companies, he formed (with Mexican backers) Telefonos de Mexico, S.A. To control that, along with his other Mexican interests, he and his associates formed a $20 million holding company, Corporacion Continental, S.A.
Those who know Wenner-Gren did not expect him to remain a telephone king very long; he is well aware that such companies are easy targets for expropriation. But the deal helped him get part of his fortune out of Sweden. After he had done that, he could sell his holdings in the merged company, and use the cash to expand his less vulnerable Mexican ventures.
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