Americans sound retreat
ASTRONG dollar and shedloads of cash may no longer be enough for American and overseas predators taking aim at Europe’s global champions.
Anglo-Dutch champion Unilever saw Kraft Heinz off the field of play within days of it unsheathing an unwanted £110bn bid.
Now it looks as if pittsburgh-based coatings giant ppG may walk away from its latest £23bn bid for Akzo Nobel – proprietor of Britain’s totemic Dulux paint brand
Akzo refused to hold detailed talks with ppG despite three offers. It has defended itself by rallying staff, Dutch politicians and the UK media against the deal. Here in Britain it wrapped itself in the Union flag, pointing out that we have much to lose.
It is a great credit to Akzo and British excellence in science that the old ICI’s labs – some of the most inventive in Britain over decades – have been maintained by Akzo and enjoyed new investment during a period of retrenchment for the Anglo-Dutch paints and speciality chemicals group.
ppG clearly is nervous about getting down and dirty with a hostile bid which could go horribly wrong and damage its reputation.
The unknown factor in all of this is the attitude of activist investor Elliott Advisors, which aligned itself with ppG and has never been afraid to shake the tree.
Without a willing buyer, Elliott could find itself isolated.
Foul play
STANDARD Life and fund managers Aberdeen like to think of themselves as exemplars of good governance and guardians of the investors who put their life savings in their hands.
The prospectus outlining the details of the proposed merger suggests they are neither. Standard and Aberdeen are forking out £97m in advisory fees for what is an uncomplicated ‘friendly’ transaction. They also intend to pay £35m to key managers to stop them fleeing to other firms.
At the same time they plan to ship out 800 ordinary workers so they can keep the two chief executives, Martin Gilbert and Keith Skeoch, in clover, grease the palms of failing stock pickers and make bankers at Goldman Sachs and Jp Morgan Cazenove ever richer. All of this is a kick in the teeth for Theresa May’s goal of a fairer society.
This might be less galling were Standard Life and Aberdeen fantastic success stories. But despite buoyant equity markets, Standard Life’s flagship Global Absolute Return Strategies is in retreat, having shed £2.8bn in the first quarter of 2017 after outflows of £4bn in 2016.
Aberdeen has recorded 15 successive quarters of outflows.
It might have been thought that Gilbert had more than enough on his hands with the merger of two Scottish firms and a role as temporary chairman of 21st Century Fox. But just a few days ago he added a nonexecutive directorship at Glencore – one of the world’s most complex commodity trading and natural resources groups.
The timing looks disrespectful to stakeholders at Aberdeen-Standard who might have expected Gilbert to put all of his intellectual muscle into winning support for the merger and making sure the new behemoth can restore faith in active fund manage- ment. If Aberdeen or Standard dare to raise governance issues in the future, they can expect the targets to laugh in their face.
Merger muddles
THE next government could do worse than remodel Britain’s ineffectual Competition And Markets Authority (CMA) on its combative Brussels counterpart.
Europe’s competition commissioner has blocked the O2 and Three mobile deal, the Deutsche Boerse takeover of the LSE and tackled Apple over tax avoidance.
In contrast, the CMA desisted from interference in BT’s takeover of EE and declined to step in during Lloyds Bank’s takeover of MBNA. Instead, it took a stand against Vodafone selling its paging service, with just 1,000 accounts, in a move which led the mobile giant to shut the enterprise.
The CMA is acting over recent deals in hospitality. It found that although there is overlap between 1,000 Greene King and Spirit outlets in local areas, only 16 pose competition concerns. Bit of a difference from when its predecessor fundamentally reshaped the market with the forced separation of pub chains from brewers.
Mystifyingly, the competition watchdog also seems to have concerns about a deal between two disrupters in the takeaway food market Just Eat and Hungryhouse.
Very strange.