Con­ser­va­tive man­i­festo: panel beater

Financial Times USA - - COMMENT -

The elec­tion man­i­festo prom­ises of the Con­ser­va­tives re­flect anti-im­mi­grant sen­ti­ment in main­stream UK pol­i­tics. The party wants to make it harder for lower-waged work­ers to en­ter the UK, cre­at­ing a flash point with busi­ness. High-rolling for­eign ac­quir­ers are also in its sights. The re­sult would be a less open mar­ket for cor­po­rate con­trol.

The Tories promised to “up­date the rules that gov­ern merg­ers and takeovers”. The Takeover Panel, whose staff in­cludes bankers on sec­ond­ment, en­force this rule book through moral author­ity more than le­gal mus­cle.

Bid­ders are al­ready re­quired “to be clear about their in­ten­tions”. What may be new is the force with which ac­quir­ers would have to abide by pledges on jobs, work­places and in­vest­ment made dur­ing a bid. The code, rewrit­ten in the wake of US bids for Cad­bury and As­traZeneca, draws a dis­tinc­tion be­tween “in­ten­tions” and “com­mit­ments”. Only the lat­ter are truly bind­ing. M&A ad­vis­ers may thus in fu­ture whis­per “agree to noth­ing” when ac­com­pa­ny­ing a for­eign bid­der to a tête-à-tête with a UK min­is­ter.

An­other con­se­quence of Kraft’s £19bn pur­chase of Cad­bury was the “PUSU”, or put-up-or shut-up dead­line. An ac­quirer must make a firm bid within 28 days of an ap­proach be­com­ing public. The PUSU pre­vents preda­tors from mount­ing sieges to desta­bilise tar­gets. The Tories could un­wit­tingly re­vive the tac­tic: they may pause bids “to al­low greater scru­tiny”.

The party be­lieves UK tele­coms and en­ergy boast “crit­i­cal” in­fra­struc­ture. That im­plies min­is­ters would be able to block takeovers. The over­all ef­fect of pledges would be to make the UK less ac­ces­si­ble to for­eign in­vestors, al­beit still eas­ier to buy into than the US or France. One banker reck­ons the Tories re­jected wider US-style block­ing pow­ers be­cause “if the gov­ern­ment could in­ter­vene in ev­ery­thing, so could the Daily Mail”. The news­pa­per is crit­i­cal both of im­mi­gra­tion and for­eign takeovers. Dis­cre­tion is still the bet­ter part of di­rigisme for the Tories.

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