Missile attack on Melrose
AIRBUS chief executive Tom Enders made his views known at the outset of Melrose’s hostile £8bn bid for GKN. He didn’t much like the cut of Melrose’s financially driven jib.
Now, Airbus has formalised its position, arguing the aerospace industry requires ‘a commitment to long-term investment and strategic vision’.
Chief operating officer Tom Williams notes that the industry does not lend itself to short-term investment.
The Airbus intervention is hugely significant. GKN in Bristol is a vital supplier of kit for the Airbus wing plants at Broughton in North Wales, employing 10,000 people. If GKN were to vanish as a supplier, France, Spain and Germany would see it as an opening to switch wing production to the Continent. That means the decision of asset manager Aviva to vote its GKN shares in favour of Melrose could risk the livelihoods of thousands of skilled workers in Britain.
It cannot possibly be in the best interests of the UK savers Aviva represents who would be horrified by sabotage of the aerospace industry.
If Airbus is so disquieted about Melrose, it is hard to believe the US defence contractors working on Pentagon contracts, such as the Lockheed Martin F-35 Lightning jet, are jumping for joy at the prospect of dealing with financial engineers interested in giving margins a wash and brush-up.
There is disquiet about the speed with which GKN sold its automotive arm to American white knight Dana. But it rightly recognises that it needed Anne Stevens and another GKN executive on Dana’s board and has agreed to a London share quote.
It is not just Airbus which fears rapacious Melrose management.
The world’s largest car maker Toyota privately says there are fears over Melrose’s ownership of a major supplier.
There are good industrial reasons for keeping Melrose at bay and depriving its leading lights of another £285m payday. The sooner Melrose pulls back and lets GKN get on with making things, the better.
Dutch comfort
THE fuss surrounding Unilever’s retreat from London to Rotterdam is overdone. It may have escaped the notice of Brexit critics, but the reality is that 55pc of Unilever shares are held by Dutch institutions.
Simplifying a duplicated structure that has been around since the 1929 merger of Lever Brothers with Holland’s Margarine Unie was a pledge made a year ago when chief executive Paul Polman fought off unwanted attentions from Kraft Heinz.
Being in the Netherlands does, culturally, offer more protection against unwanted bids than in the UK. There is a tradition of consensus under which the consent of all affected parties, workers, suppliers and the body politic is taken into account before bids and deals can be done.
In Britain it is a rush to the finish line with cutting-edge firms including Arm Holdings and Worldcom surrendering independence before anyone has woken up to the foolishness of selling our intellectual property.
If Unilever had decided to stay in London we would be hailing it as a victory for Brexit. The reality is that nothing much will change in Britain. The headquarters in London will become home to two divisions – beauty and personal care, and home care – representing 60pc of turnover.
UK investment spend will be £1bn a year with Theresa May joining Polman at the opening of a new research centre on the Wirral. We are assured the one-for-one swap of UK shares for euro-denominated stock raises no tax issues for private shareholders, as was the case when the two Shell companies came together in 2005.
The question for UK professional investors is whether Unilever can remain part of the FTSE 100 index. Certainly, Shell is still part of it and, with 45pc of Unilever stock held by UK-based investors, there should be no bar.
The London Stock Exchange and regulators who are bending over backwards to bring Aramco to the City would be bonkers to allow Unilever to fall by the wayside.
Water boarding
LABOUR’S water nationalisation threat is having an amazing impact on the utilities.
Anglian Water is retreating from the Cayman Islands, cancelling an inter-company loan, putting a majority of independent directors on the board and cutting the dividend to help pay for investment.
Who needs regulator Ofwat when we have Jeremy Corbyn?