Atkins is too quick to sell
ONE lesson which could be drawn from the Imagination Technologies fiasco is if a rich bidder like Apple comes into view, it is best to bite their hand off. Otherwise there could be a doomsday ahead as Imagination investors (including this writer) have just realised after a 62pc share-price collapse.
That may well be a good reason why the board of WS Atkins looks ready to succumb to the courtship of Canada’s SNC-Lavalin.
The prospect of capturing a premium for a company which has seen its shares jump by 34pc this year must seem too good to be true. Atkins, with a pre-bid market value of about £2bn, might be considered too small to the regarded as a national champion.
But there are a couple of questions the board, chaired by former Cobham boss Allan Cook and run by the German physicist Professor uwe Krueger, needs to answer before offering up Britain’s top engineering consultancy on a plate.
The company’s leaders should remember that like other UK corporations operating on the global stage, they are beneficiaries of the depreciation of the pound, which both boosts income and profits and diminishes the real value of any takeover premium.
It should also be noted that the company could well fall within the Government’s guidelines for part of the critical national infrastructure. Among other things, Atkins is playing a key role in the Thames Tideway super sewer project for London, helped to design and build New Street station in Birmingham and has a toehold in a nuclear fusion project in France.
It also has critical air transport expertise, which is being put to use in the world’s busiest airport in Atlanta.
Acquiring such skills would no doubt be terrific for the Canadian predator SNC-Lavalin, which only does 5.3pc of its sales in europe as opposed to 57pc for Atkins. It has to be asked whether a British company bidding for a Canadian firm would be welcomed with such open arms?
Canada has a long history of keeping out- side interests, including London- quoted miner BHP and the London Stock exchange, at bay. Justin Trudeau’s government has shown signs of liberalising that policy. But no deal passes without intense scrutiny from Ottawa and provincial governments.
Spanish practices
DECLARING war on Spain over Gibraltar does seem a little extreme.
But if Britain really wanted to rattle the cage in Madrid and Brussels, it has very powerful weapons at its disposal.
The Spanish tax code allows corporations to write-off the cost of takeovers, and this combined with Britain’s policy of open markets allowed the UK’s Iberian friends to become big owners of former UK-QUOTED enterprises. Key assets were snapped up by Spanish buyers before the financial crisis and the eurozone implosion brought matters to a shuddering halt.
The most eye-catching asset in Spanish hands was Heathrow airport, bought by Ferrovial in 2006. It is still a dominant shareholder with 25pc of the equity. Spanish energy group Iberdrola bought Scottish Power only to be accused by politicians in Scotland of siphoning off income to invest in the US. The biggest takeover of all was the £18bn purchase by Telefonica of mobile network O2. The Spanish firm wants to sell O2 back to British investors but has not managed to launch its initial public offering as yet. Spain also owns a great chunk of our banking market through Santander UK and Barcelona-based Sabadell, which bought itself a British hedge against Catalan independence when it swallowed TSB.
The UK has a long history of plundering Spanish assets dating back to the Armada, and countries often turn to the economic weapon when they want to make a point.
The seizure of Iranian assets held in London at the time of the US hostage crisis in 1989 is a case in point, and financial sanctions played a big part in bringing both the apartheid regime in South Africa and more recently Iran to the bargaining table.
In spite of Britain’s historic love of gunboats, there is no reason to fire off that fusillade quite yet. There are plenty of other ways to make the Spanish pips squeak.
Worker power
REMEMBER the Linde takeover of British Oxygen in 2006 which saw a vital supplier of services to the NHS fall into overseas hands? Linde itself now finds itself under siege from US rival Praxair and Linde’s workers, who sit on the supervisory board, want it blocked.
Pity employees in our own firms don’t have the same powers.