Bid sends wrong signal
Running a public company can be harsh. investors are impatient, especially when it comes to technology firms where earnings can be bumpy. But hiding behind private equity ownership is rarely the best answer.
Last July, uK satellite pioneer inmarsat bravely showed American rival Echo Star the door on the grounds that an offer worth 532p a share (some of it paper) undervalued the Silicon Roundabout-based group. Chief executive Rupert Pearce spoke confidently of the firm’s strategy on a stand-alone basis.
Recently, inmarsat has provided upbeat briefings on its progress on beaming wifi into aircraft in flight, having already signed up carriers such as Emirates.
Just eight months later, inmarsat looks as if it is ready to flog itself off to a consortium headed by uK private equity outfit Apax, Warburg Pincus of the uS, and a bunch of Canadian pension funds at a not-muchimproved price of 544p.
The future for inmarsat should not just be settled on price alone. The would-be buyers look a relatively benign bunch and there is no sign of a Chinese or Russian marauder around the corner. But once in private equity hands – and out of sight and mind – who is to say that a company important to national security will not end up in the wrong hands overseas. inmarsat already is the repository of significant shipping and aircraft movement data. its innovative wifi applications could offer a wonderful intelligence opportunity.
Just as worrying is the potential loss to the uK of advanced technology developed here and paid for by taxpayers through our research-based universities. At a time when germany is working to tighten the national grip on cutting-edge technologies, Britain too easily waves them goodbye.
Softbank’s stewardship of ARM has been disappointing, with the sale of the Chinese operations to a Beijing- controlled entity. Earlier this week, we saw former RBS offshoot Worldpay land in the uS at a phenomenal price. The May government rightly has been referring an increasing number of tech sales to the Competition and Markets Authority (CMA) for scrutiny.
inmarsat’s current investors, including Lansdowne Partners and uK funds Aberdeen and Jupiter, should show steel and back the project for the longer term.
And Business Secretary greg Clark should break from Brexit machinations and immediately refer it to the security services and CMA in the national interest.
Snagging list
SOMEOnE had to take the blame for the failure of Kingfisher to deliver on its 2015 promise of £500m extra profits. So waving goodbye to chief executive Veronique Laury is the easy answer.
Truth is that firms that set themselves ambitious financial markets are always on a hiding to nothing. This is especially true in fast- changing retail and do-it-yourself, which have fallen out of fashion.
A positive consequence of Britain’s open borders to European migration has been the arrival of skilled and hardworking Polish and other Eastern European tradesman. They have supplanted DiY and the British botching specialists who would rather be on their tea breaks or down at the boat club. The struggles of B&Q come as no surprise. its main uK rival Homebase has changed hands at least four times in recent years and finally ended up being sold for £1.
Keeping B&Q up and running, if shrunken in size, makes sense. Even a shrinking B&Q provides useful cash flow while the star in the firmament, Screwfix, which serves the trade online and through trade counters, is allowed to grow.
Laury reportedly found life in London less than ideal. it might have been easier if chairman Andy Cosslett and the board were more supportive and investors willing to give her more time. instead, Laury’s hold on the job was undermined by blame-shifting and rumours of impending exit. unfortunate.
Pension ruse
LLOYDS chief executive Antonio HortaOsorio is in need of better advice.
When under fire, it is critical to get ahead of the criticism with a grand gesture. HortaOsorio’s belated waiving of £3,000-a-year from a final salary pension backfired badly. it shifted focus to his excessive cash-in-lieu pension payment of 33pc of pay worth £419,000 a year.
Horta-Osorio should volunteer to cut the cash allowance to the standard Lloyds pensions contribution – a generous 13pc. Otherwise he risks widening employee and investor scrutiny of an aloof management style.