Probe private equity buyouts, ministers told
As Smiths Group faces break-up . . .
MINISTERS were under pressure last night to order an inquiry into private equity plundering of British firms after Smiths Group became the latest to be targeted by a foreign predator.
Shares in the FTSE 100 company will be in focus this morning after it emerged that TA Associates had made a £2bn approach for its medical division, which makes ventilators for hospitals and has around 100 staff in the UK.
A successful sale would see Smiths Group, which is valued at £6.5bn and has 23,100 staff, effectively broken up.
The move led to cries for ministers to intervene amidst growing fears that prize British assets are being poached on the cheap, putting jobs, pensions and suppliers in the UK at risk. More than 135 firms have been sold to private equity since the start of 2020, according to Dealogic.
Nick Hood, a senior adviser at Opus Restructuring, said: ‘There has to be an inquiry, there has to be some hardheaded analysis of what’s happened so far. It’s up to the Government to find a mechanism to prevent these companies being buried in debt.
‘Some private equity companies are perfectly ethical and run their investments in a responsible manner, but far too many don’t.’
His comments came as the board of Morrisons was placed under intense pressure to defend its decision to accept a £6.3bn bid from a consortium led by private equity firm Fortress. Chief executive David Potts has written to 3,000 farmers to say commitments from the potential new owners ‘carry genuine weight’, even though they are not legally binding.
Top ten shareholder Legal & General last week urged the grocer’s board not to allow a takeover ‘for the wrong reasons’.
At the same time, M&G slammed company directors for selling off the businesses they run too cheaply and cheating investors out of longterm gains.
Michael Stiasny, head of UK equities at the fund giant, said bosses were taking ‘too much of a short-term view’ and should be more ‘willing to say no’. Smiths Group and TA Associates declined to comment.