Babcock/VT: Three Cheers for Andy Brough!

Time and again Pro-Gov has warned that many mergers get pushed through at the expense of the selling shareholders. Giving the bidder access to the target's books tilts the favor against ordinary shareholders who are left with less information on which to base their decisions. The same can be said to the tactic of 'sounding out' the major institutional shareholders. All communication should be strictly on a public basis - similar to the regulations for disclosure of information in public offerings (esp in the USA). So we are glad that Andy Brough tries to put a spanner into the Babcock bid - after all, the shareholders of the bidding company are also often reduced to being the unwilling accomplices of a CEO's ambitious empire building.

Compensation: Baseball benchmark sanctioned by Obama

When President Obama states that the compensation of CEO's is not excessive when compared to what some sports stars can earn he tacitly assumes that the compensation of sports stars is set in a free market. We want to point out the they benefit from the protection of intellectual property rights. We would argue that this protection may well be to the detriment of the public good and should therefore scaled back.

Lessons to learn from Cadbury takeover

When the outgoing Chairman of Cadbury calls for new regulation of takeover bids it leaves a sour taste in the mouth. Presiding over another sell-out and than complaining about the alleged role of hedge funds in the bid smacks a bit of the pot calling the kettle black. We have repeatedly argued that current takeover rules are stacked in favor of the bidding party. Simple rules like restricting the right to vote to a certain percentage and to shareholders holding shares for longer than one year and taxing short-term capital gains on the same level as ordinary income (without any let-out for foreign holders, esp those located conveniently in tax havens like the Cayman Islands) would go a long way to return control of public companies to long-term shareholders. Preventing new owners of companies from dumping excess staff on the social security system financed by the taxpayer would prevent new owners from pursuing a 'slash-and-burn' strategy. The argument that any company that is listed is open to bids does not hold water either. Selling a company as a whole should only be a last recourse and subject to extremely onerous rules. Listing a company means above all that any shareholder should be - and is - able to sell his shares at any time. Anyone investing does so in the knowledge that he can sell again. That does not mean that the company itself should be sold. Investors should hold shares because they think that they will be worth x in a number of years, not because they can flip them in a few nano-seconds (High-Frequency Trading is a new cancer that is spreading rapidly!). The rules set by the Takeover Panel are plainly self-serving as the Panel is basically controlled by representatives of the corporate finance industry that profit handsomely from merger and acquisition activity.

Santander to float Bradford & Bingley?

It is just a bit over one year that the shareholders of B&B got expropriated by the British Government and saw control of the business handed over to Banco Santander shortly afterwards. So it may ruffle a few feathers among the investor community if there is talk that Banco Santander may float a stake in B&B or some other holdings in the UK on the public markets here. While Santander appears to be the laughing third party in this sorry affair one would hope that the effort of the previous owners of B&B to get satisfaction in the courts gets a boost from this slap in their face. After all, the situation at B&B cannot have been all that bad. Forensic accountants to the fore! And what about all that talk about 'Human Rights'?

New Look: Thanks a billion!

News that New Look will do an IPO - again - is another slap in the face of gullible institutional shareholders who agreed to a buy-out by management and private equity funds in 2004. Now the public will again be asked to pay vast profits to them - courtesy to their fiduciaries in the investment and pension management industry and a dysfunctional market for corporate control.