Conservative manifesto: panel beater
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.