Matalan - Public Shareholders lose out

In 2006 the founder and owner of a 53 pct stake in the company took Matalan private. Now the company may be sold on for more than twice the price that was paid in the 2006 transaction. Pro Gov argues regularly against transactions that treat public shareholders as temporary guests on a path to riches - with the beneficiaries being majority owners, company management or so-called 'private' equity investors. It is in the public interest that as many companies as possible are owned by a wide spread of private investors and we argue that public companies should benefit from beneficial tax treatment in order to prevent the concentration of wealth among a very small part of the population. Those in charge of public companies (and the institutional investors acting as fiduciaries for the wider public who is the ultimate owner of the money they manage) must see a public listing not simply as a ticket to get rich but as a duty that carries significant responsibilities. Unfortunately, the way ownership in public companies gets traded is in contradiction to the rationale of publicly listed companies as we see it. There is no proper democratic process that decides the outcome of merger bids and buy-out offers. In the case of Matalan, for example, a clear majority of the shares not already controlled by the majority owner should have been required to vote for the bid. In addition, a single bid should be required in bid situations and that bid would have to be accepted by 95 per cent of the public shareholders in order to succeed. This would prevent the 'gaming' of bids and the process of haggling that currently occurs between the parties to the bid (and the media). As matters stand, the public - thanks to the casino mentality displayed all too often by their 'fiduciaries' - is the helpless spectator to another case were they see that someone reaps huge profits on the shares they were coerced to sell only a few years back. Is this Casino Capitalism in the public interest?