Mrs May’s takeover test
POLITICAL leaders in France treat yoghurt as a national treasure, one to be nurtured and milked on French soil. Even the hint of a bid for Danone some years ago had the bureaucrats from les grands ecoles spluttering over their croissants, claiming that it must be blocked at all cost.
The Danone yoghurt-making giant was even described by one minister as a ‘flower’ of French industry. The talks between PepsiCo and Danone never went ahead. Yet last month Danone launched its own $10bn takeover of WhiteWave Foods, the US Silk Soy milk products group, without a peep from the authorities even though there will be huge cost-cutting and inevitable job losses.
Say what you like about French protectionism and double standards, at least overseas corporates know where they stand with the authorities. Quite simply, everything French is in the national interest.
If the takeover boom for UK companies takes off this autumn as bankers are predicting, then the Prime Minister will be under pressure to define more narrowly what constitute the ‘flowers’ of UK industry, which companies should be protected, and which should be allowed to be gobbled up.
It may be that deal-makers are talking up their own book – it is August after all.
But from what they are saying, the lower pound and a renewed confidence in the UK economy are prompting overseas predators to run the slide rule again over some of our prize assets. BT, ITV and GKn are all said to be on the list of favourites. The Prime Minister has already said she wants to make it harder for foreigners to take over top British companies, and hinted at tougher rules.
More pertinently, she gave examples of previous bids which, if under her roof, would have been blocked such as Pfizer’s bid for AstraZeneca. In the event, Pfizer’s bid did not go ahead. But Theresa May’s example does give us a clue to the sort of ‘national’ assets she considers off-limits.
However, she has already missed two opportunities to intervene in foreign takeover bids since coming to power: the merger between Deutsche Borse and the London Stock Exchange (which is definitely in the yoghurt league) and SoftBank’s bid for Cambridge chip-maker, ArM Holdings, which on balance, doesn’t make the yoghurt grade. If there is such a boom, the PM is going to have to decide quickly what is the UK’s equivalent to yoghurt.
Which industries should be considered treasures, and blocked from overseas takeover? Should a sale of BT – a vital part of our telecommunications infrastructure – be stopped?
The irony is that the Government has all the powers it needs to block any takeover bid it wishes, and the rules do not need changing. If a takeover or merger gives rise to legitimate matters of public interest, other than competition, ministers have formal powers to intervene in cases involving national security, financial stability and media plurality.
These rules are already enshrined in the Enterprise Act 2002. national security is the knock-out clause that ministers can use, as you could argue it covers everything from defence to telecommunications and energy. Maybe even yoghurt. May’s tough position on delaying approval of the Hinkley Point project shows she is brave. But is she brave enough to test her own takeover powers?
Batting for Balfour
DO YOU know the way to San Jose? Well, it seems that Balfour Beatty does. Or at least, that appears to be the case.
The British infrastructure giant has just won a spectacular £524m contract to electrify the 52-mile Caltrain rail corridor between San Francisco and San Jose. It’s a massive task as Balfour has to lay the foundations for the future operation of high speed trains yet minimise disruption to the 92 or so daily trains that take 65,000 commuters between the two cities.
Balfour boss Leo Quinn says more than 300 jobs will be created. It’s a great vote of confidence in the new team at Balfour, which took over two years ago after a torrid time and several profit downgrades. Quinn, together with tough Aussie chairman Philip Aiken, are doing a great job in cleaning up the business and winning new contracts like this. At 244p, the shares are a ‘buy’.
Hot off the production line
I MAY have just met the new James Dyson. She is a delightful 27-year-old LSE law graduate called Anjali Shah, who is putting the finishing touches to an electric hot water bottle. We met by chance on the Tube yesterday and, as you do, she told me about her invention – one of those brilliant ideas that you wonder why no one has thought of it before. It’s a hot water bottle that’s heated up with a charger, like plugging in a kettle. Shah came across a crude version while in China.
Working with an engineer, she has refined the model, had it approved by the UK’s safety authorities and is manufacturing in China. She’s ready to sell into UK stores, so John Lewis, Boots et al, get ready for the noozieComfort bottle. Unsurprisingly, Shah is already working on her next product.