Once the political landscape stabilizes at Downing Street, perhaps the spotlight will turn to the FTSE 100 and the declining status of the UK as a fertile ground for creating, hosting, and investing in public companies. This neglect has allowed the erosion of Britain’s corporate landscape, with a particular concern over heavily-indebted buyouts that drain national wealth. Thames Water’s troubled history is a glaring example of this issue.
Equally alarming is the transfer of value to financial opportunists when technological treasures, such as Arm Holdings, are sold to foreign entities. This trend sees British innovation and potential slip away from domestic hands.
Intertek, a venerable firm with a 141-year legacy in testing, inspection, and certification services worldwide, is the latest casualty. This hidden gem is being acquired by Swedish private equity group EQT for a striking £10.6 billion, translating to £60 per share, a hefty 62 percent premium over the pre-offer share price, factoring in debt and dividends.
The script is all too familiar. Initially, the company board feigns resistance, leading to an increased offer. Meanwhile, new players on the shareholder roster, including hedge funds and activist investors, pressure directors to accept the deal. Investment bankers, too, underscore a fiduciary duty to approve the sale, ensuring the cycle continues.
It is a hidden gem being taken out by Swedish private equity barons EQT for £10.6billion, or £60 a share – described as a premium of 62 per cent to the pre-offer share price (including debt and a dividend).
The pattern is familiar. The board puts up a pretence of rejection, driving the offer price up, then newcomers to the share register including hedge funds and activists demand directors take the money. Investment bankers remind directors of a fiduciary duty to accept.
Easy pickings: Activist investors and private-equity firms are targeting undervalued, London-listed firms with highly-leveraged deals
Whatever private equity can deliver, existing executives should be able to provide as speedily.
After all, they know the enterprise intimately, are less encumbered by debt and surging interest rates, and won’t hit the brick wall which many buyout firms face when seeking to dispose of assets.
Intertek, like so many valuable industrial firms, could eventually end up in the stodge of a secondary buyout fund.
This is not EQT’s first raid on the UK. Three years ago, EQT swooped on vet drugs developer Dechra Pharmaceuticals.
Listed Intertek joins powerful UK companies, including City stalwarts Schroders and Beazley, to fall into uncaring overseas hands.
At Intertek, in common with Unilever, activists with small and opaque holdings have too big a say.
Among those forcing the hand of chief executive Andre Lacroix is Matt Peltz, son of Nelson Peltz, with a flimsy stake. They do immeasurable damage to UK plc.
Speech beached
In the United States they have a phrase for it. ‘Dead on Arrival’ is how budgets, written in the White House, are described when reaching Capitol Hill.
Many presidential aspirations never see the light of day in Congress.
The King’s Speech delivered as scheduled yesterday is full of grand ideas and accompanied by no less than 129 pages of notes, including supporting words from toadying interested parties.
But with the Government in turmoil and the shape of the future leadership unknown, it is all very academic.
If the objective is economic growth, then the flaws are manifest. Renationalising steel and the creation of Great British Railways simply adds to a bloated Government balance sheet.
The Treasury’s growth agenda is dominated by efforts to free up regulators and to speed approval of fit and proper persons in the City.
The danger of easing scrutiny is evident for anyone who has followed disciplinary actions brought against Jes Staley at Barclays and, for that matter, those responsible for Carillion’s collapse.
In Washington a month ago, Chancellor Rachel Reeves propagated the idea that given the current Strait of Hormuz stalemate there was a case for expanding North Sea oil drilling from existing fields, and maybe beyond.
The King’s Speech reiterates a manifesto pledge ‘not to issue new licences’ and a ban on fracking.
Fresh faces on Downing Street might take a second look at this dogma.
But don’t count on it.
Drone power
Are the big, heavy metal beasts of the Western defence industry in danger of being left behind?
Ukraine showed how home-made drones can nullify a superpower opponent. Iran’s drones threaten Arabian Gulf energy.
Peter Thiel, a founder of PayPal and Palantir, is among the big names behind Anduril which is seeking to compete with defence giants such as Lockheed Martin by using software command and control systems, and unmanned aircraft.
Latest fundraising values Anduril at $61billion (£45billion). That’s not far short of BAE Systems’ current £57billion valuation.
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