Companies in the news ... and how they were assessed
Aveva/schneider: another blow for UK tech?
Farewell to another British tech darling. “After two botched attempts in as many years,” French industrial group Schneider looks set to have its way with Aveva, said Olaf Storbeck on Reuters Breakingviews. The FTSE 250 software firm has agreed a £3bn merger deal that will see Schneider take a controlling 60% stake. Shareholders cheered the move, said Sam Dean in The Daily Telegraph: Aveva’s shares jumped 25% on hopes that the company, which supplies software to the oil and gas industry, will become a global leader in industrial software. But it’s “the end of an era for the Silicon Fen”, said Nicholas Megaw in the Financial Times. Although Aveva will keep its name and Cambridge hub, it is the last of the city’s “unicorns” (start-ups valued at over $1bn) to be sold into foreign ownership – a process that began with the disastrous sale of Autonomy to Hewlett-packard in 2011. Cambridge is still “a hotbed of activity, with large numbers of start-ups”; several big US groups, including Amazon and Microsoft, have bases there. But this deal will do nothing to assuage concerns about the lack of British-owned players capable of competing with Silicon Valley. “We’ve become great starters, but we’re not finishers,” observed one Cambridge insider last year when another local legend, chip designer Arm, was sold to Japan’s Softbank for £24bn. Nothing much has changed.
Lego: less than awesome
Back in March, the world’s largest toymaker boasted of generating the highest revenue in its 85-year history, despite a “soft” European market. Conditions on the continent have since improved; the same, sadly, is not true at Lego, said BBC News online. The Danish firm has announced plans to cut 1,400 jobs globally (about 8% of its workforce) after suffering a sales slide. Chairman Jørgen Vig Knudstorp blamed the company’s “increasingly complex organisation” after five years of double-digit global growth, and argued that it needed a “reset”. Yet the chief problem may well have been complacency, said Andrew Hill in the FT. “Analysts love to study success,” and Lego, which appeared to defy the travails of other traditional toymakers as children increasingly play digitally, has long been a favoured exemplum. “But eulogies can be dangerous.” Lego’s “awesomeness” was always likely to revert to “ordinariness”. These latest results, which follow the ousting of CEO Bali Padda after just eight months in the job, suggest that Lego is facing its biggest test since coming close to financial collapse in 2003-04.
Reckitt Benckiser: disinfected?
“Shareholders in Reckitt Benckiser have had few reasons to complain in recent times,” says Alex Brummer in the Daily Mail. The company’s “laser focus on super-brands”, such as Cillit Bang, Nurofen and Durex, has “made it the star of Britain’s consumer sector”, driving the £52bn company into the FTSE top ten. But recent blunders, including being caught napping during July’s cyberattacks, suggest it has taken its eye off the ball. And shares have suffered. “Reckitt’s ability to deliver superior growth is down to ruthlessness.” It “takes no prisoners” when it comes to marketing and a similar mercilessness is now being shown at headquarters. Four of the group’s top ten managers are leaving. “That is all a coincidence no doubt.” Reckitt’s website proclaims we’re “Better together”. Maybe not.