Mayor joins GKN defence
FORD-TOUGHENED engineer Anne Stevens has won a significant political ally in her battle to save GKn from the grip of financial sharpshooters Melrose.
The Tory mayor of the West Midlands, Andy Street, recognises the issues at stake should GKn eventually fall into wrong hands.
As the beating heart of British engineering, Birmingham and the West Midlands could be deprived of a research and development champion, creator of eAxle and the ‘Wing of the Future,’ should Melrose press its hostile takeover.
It is fashionable to marvel at the skills of the Melrose three – chris Miller, Simon Peckham and Tory donor David Roper – for their ability to turn ailing enterprises into gold dust. But as shareholder advisory group PIRc points out, Melrose reported losses for the last two years, struggles with restructuring costs at US air management firm nortek and is battling to turn around gas turbine offshoot Brush, where there has just been another round of sackings.
Melrose shareholders have enough to worry about with these considerable difficulties without the company piling up the debt and management risk by taking on a much bigger enterprise with a heritage of innovation as significant as GKn.
Street was encouraged to join the defence of GKn by criticism in the Birmingham Post. He raises vital issues around jobs in the region, risks to the pension fund and the ‘national security’ value of GKn as a critical supplier of parts to the American aerospace industry. Britain’s wider strategic interests are not simply measured by being a Ministry of Defence supplier.
The intervention of the Business committee chaired by the smart Labour MP Rachel Reeves on March 6 will be critical in the court of public opinion.
If the Melrose three want to be convincing they will have to pledge to be guardians of the long-term development programmes coming to fruition at GKn such as eDrive (electric drive shafts) and new wing technology for the Airbus plane. Flogging assets off to the first overseas buyer that comes along cannot be an option.
In France, President Macron has just blocked a chinese takeover of Toulouse airport, seen as strategically important because of nearby Airbus assembly.
The committee on Foreign Investment in the US stands ready to repel a £114.2bn bid by Singapore chipmaker Broadcom for US rival Qualcomm.
Former John Lewis boss Street is speaking up for the Midlands and Britain. It is time cabinet members did the same.
Premier riposte
A SecOnD woman chief executive battling meddlesome forces is Alison Brittain of Whitbread. Activist investor Sachem Head wants to see her driving the balance sheet harder by doing a sale and leaseback on its owned Premier Inn estate, increasing gearing and, maybe, demerging costa.
To her credit Brittain is sticking to her guns by pushing on with more costa in china, where it has bought out franchise partners, and buying more Premier Inns in Germany. She is taking control of a chain of 19 hotels, with 3,110 rooms, in Germany. The deal will give Premier more purchasing power in the German budget hotel market where penetration is low at 6pc against 24pc in Britain.
Most budget hotels in Germany are family-owned with few opportunities for benefits of scale in terms of yield management, purchasing and training. The purchase of Holiday Inn express means Whitbread will own 31 German hotels in key cities.
Brittain also demonstrates that, Brexit or no Brexit, home-grown firms still have big opportunities on the continent.
Cool coronation
One might have expected a halo effect for ITV shares after the comcast bid for Sky.
Instead chief executive carolyn Mccall saw a less than rapturous reception after a 5pc drop in full-year earnings.
Yet, in the age of online streaming, downloads and all the rest, ITV is one of the few destinations where advertisers know they can reach a mass market audience.
Mccall looks as if she will follow her predecessor and focus on being a production house. Holding back on a special dividend gives her room for future investment.
The big pay-off could come if she follows the Sky model and focuses on technology using algorithms to better attract advertisers and bring audiences to the ITV Hub.
easy-peasy.