Dutch courage required
ThE battle for control of Dulux maker Akzo Nobel is spinning into all-out war. Predator Pittsburgh Plate Glass (PPG) is threatening to go hostile with its offer and activist investor Elliott Advisers is warming up for court action. It wants to force out Antony Burgmans as chairman of the supervisory board and require the company to consider its raised £23bn offer for the Anglo-Dutch champion.
Elliott has a habit of launching a boarding party, as Katherine Garrett-Cox learned at Alliance Trust.
Nevertheless, if the atmosphere at the Akzo Nobel’s annual general meeting in Amsterdam is anything to go by, PPG faces formidable obstacles. Even though Elliott claims support from some other large investors, its intervention at the AGM was met with stony silence while the views of smaller investors, many of them worker shareholders, were met with tumultuous applause.
As Sir Philip Green learned when he sought to take over Marks & Spencer back in 2004, resisting a popular revolt among smaller shareholders is extraordinarily hard. Under Dutch takeover law, the board is required to take account of all stakeholders, not just investors, when accepting a bid.
Sometimes the executives of companies such as Akzo Nobel are accused of simply wanting to hang on to their fat pay and benefits. Maybe, but in this case there are far more significant reasons for keeping Akzo Nobel independent. PPG simply wants to remove a competitor for its paints and coatings from the marketplace.
The US firm’s first task on winning control would be to cut costs, with the Dulux and coatings R&D operations in Britain, an inheritance from ICI, an obvious target.
Elliott and PPG should get back in their box. They are not wanted.
Changing tastes
ThE current trendy theory about the consumer pound is that we all have enough stuff and would much rather indulge ourselves by sitting in a coffee shop or travelling. If that were the case then Britain’s home-grown coffee-shop brand Costa ought to be in clover. But after a buoyant 2016, when owner Whitbread delivered on profits and sales, the first quarter looks less alluring and shares came down with a bit of a bump.
The early explanation from chief executive Alison Brittain was that the consumer is feeling constrained. But by what? The squeeze on household incomes has been barely noticeable and Premier Inn ought to be benefitting from overseas visitors taking advantage of the cheaper pound.
One suspects Whitbread is simply feeling the breath of competition. Costa offers better coffee than Starbucks, home roasted and less burnt. But the brand is being diluted. Twelve outlets in Cheltenham, albeit most of them in filling stations, raised local hackles and coffee drinkers may be seeking more craft experience. As for Premier Inn, it is doing fine – but it is not out there alone. Rival Travelodge and market disrupters such as Airbnb could capture the public imagination.
Costa has the unenviable task of staying a step ahead of the consumer. It seeks to do so with its ‘finer coffee experience’ and new ranges including bacon butties and American-style frostinos, chilled blended drinks for the summer. No one can say that Brittain is not trying.
Fearless chairman
IN spite of Garrick membership Andrew Tyrie, who is leaving Parliament after two decades, was not regarded as the most clubbable chairman of a Commons select committee.
But thanks to his forensic questioning his Treasury Select Committee has been highly effective. For reasons still unclear, Labour, followed by the Coalition government, were loath to follow the American example and appoint a high-level commission into the events leading to the financial crisis.
Tyrie and the TSC stepped into the vacuum. his determination forced publication of the delayed Financial Conduct Authority report into the meltdown at hBOS. It was during TSC hearings that we first learnt of the alleged pressure exerted by the Bank of England on Bob Diamond of Barclays to force down the Libor interest rate. It was the TSC’s intervention which shortened Charlotte hogg’s sojourn as deputy-governor of the Bank of England.
Tyrie was a relentless critic of governance at the Bank of England and in particular the ineffectual behaviour of the Court as a check on Bank staff. It is a tribute to him that Bank officials regarded preparations for an appearance before the TSC with dread.
he would make a terrific independent director on any bank board seeking to improve behaviour.