Britain for sale: the real price of foreign bids
The takeover of Cadbury by US predator Kraft created plenty of sound and fury, but has it really changed anything?
The battle for banknote printer De La Rue, which is under siege from French rival Oberthur is likely to start heating up next week, as the Takeover Panel's deadline for a firm bid approaches, and the omens are it will be sold out too, if the price is right.
In the wake of the Cadbury affair, the Panel conducted a review and gave companies stronger protection against prolonged phony bid wars, but shied away from stronger reform.
For all the upset generated by Kraft, the thinking about overseas takeovers does not appear to have evolved one jot.
De La Rue's fate will be decided on the same narrow criterion of short-term shareholder value - in plain English, a tempting enough price - that spelled the end of the road for Cadbury as an independent British company.
De La Rue has undeniably brought some of its troubles upon itself. It has been weakened by the loss - temporary, one hopes - of business from the Reserve Bank of India, a major client.
Oberthur cannot be blamed for its predatory instincts. The real problem is that these impulses are indulged in the City and in Westminster.
Open capital markets, with a largely free rein for foreign bidders, are held to be A Good Thing for the UK economy, but there is virtually no scrutiny of how companies fare after they are taken over. The impact of a takeover on employment, research and development, or the UK's tax take do not play a part in the decision. Yet as Kraft's behaviour over job losses and tax has shown, the wider implications of takeovers for the economy can be negative.
Taking price as the sole yardstick in assessing a deal is shortsighted.
In the case of De La Rue, Oberthur has proffered cash, so its shareholders have no direct interest in what happens to the UK firm posttakeover: they can just take their money and run. That is probably the reason investors seem unconcerned about how highly leveraged Oberthur will be after the deal, and insouciant over its failure to articulate a compelling strategy.
Tim Cobbold, the new chief executive of De La Rue, has a golden opportunity to reinvent the business.
The likelihood though, is that he will sell out if the offer is high enough, just as he did at Chloride, which he handed over, at a juicy price, to Emerson of the US.
It doesn't have to be like this. I spoke this week to one businessman, Stephen Cohen, who owns and runs a company called Vivreau, which supplies water filtration machines and bottles to restaurants and companies.
Cohen set up the company in the 1980s, when he put together his first filtration unit, Heath Robinson style, in his garage in North West London.
Its turnover has grown to around £6m, with clients including KPMG, Vodafone and GlaxoSmithKline and it is a point of pride for Cohen that all his manufacturing takes place in the UK, even though he could undertake it more cheaply abroad.
And when the UK firm that printed labels for his bottles ran into financial problems, he didn't shrug his shoulders and seek a cheap foreign supplier - he bought the company so he could continue his Briti sh- only manufactur ing policy.
'I have had three or four attractive offers from foreign competitors, but I said "No" because I knew they wouldn't understand what made the business tick,' he told me.
'If I can make my company profitable by running it like this, I don't see why other people can't do the same.'
Unfortunately, the men and women who run large quoted companies think differently. Sir Roger Carr, when he was chairman of Cadbury, believed it was his fiduciary duty to deliver 'shareholder value' and no doubt Tim Cobbold feels the same.
decisions about the future of some of our largest and most important companies-should not be taken on the basis of the perceived short-term interest of one group of stakeholders alone.
Large independent companies in the UK are becoming an endangered species. Target company managements will continue to succumb as long as they are pressurised by shareholders who want quick returns, and incentivised by reward packages that pay millions when they sell out.
Like Stephen Cohen, I believe there are broader interests at stake here.
It would be a terrible shame if De La Rue, which survived the bombing of its printing plant in 1940, were to fall into the hands of an opportunistic French bidder.
The future of our companies should not be decided on price alone - it is also a question of values.
Most watched Money videos
- How to invest for income and growth: SAINTS' James Dow
- Fiat pledges to cease grey car production as they launch new EV
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Land Rover unveil newest all-electric Range Rover SUV
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Mercedes has finally unveiled its new electric G-Class
- Mini celebrates the release of brand new all-electric car Mini Aceman
- Blue Whale fund manager on the best of the Magnificent 7
- Mini Cooper SE: The British icon gets an all-electric makeover
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Watches of Switzerland buys Italy's Roberto Coin Inc for...
- ITV hit by Hollywood strikes as it pins hopes on Euros...
- Bank of England paves way for Britain to cut interest...
- BAE Systems tools-up for growth as Britain plots defence...
- Avon Protection handed £38m gas mask contract by MoD
- Ford confirms it will cull another of its best-selling...
- Why we need more than a British Isa to move the dial on...
- Mortgage rates are climbing again - should we be worried?...
- BUSINESS LIVE: BoE base rate decision; ITV eyes ad market...
- Used car sales hit a five-year high as fresh supply of...
- Vodafone told to boost security as £15bn Three merger is...
- ITV hopes for summer ad boom as it continues to reel from...
- Takeover target Wood Group hit by slump in revenues as...
- Cameron left red-faced as Greensill sues Government over...
- BBVA goes directly to shareholders as it steps up bid for...
- Bailey pulls his punches on interest rates yet...
- MARKET REPORT: North Sea giant Harbour closes in on £9bn...
- Snoop Dogg cannabis firm to ditch London after losing 97%...