Somewhere in the bowels of Whitehall there must be a document titled Advice to Ministers on Foreign Takeovers.
It says that when the government is challenged on the merits of foreign deals, the answer should always be the same: it is a vote of confidence in companies’ desire to invest in Britain.
It’s fantastic when a commercial investor like Nissan decides to build a gigafactory in the Northeast.
Company Secretary Kwasi Kwarteng has backed a debt-fueled, private equity bid for Britain’s fourth-largest grocer Morrison, despite serious concerns over jobs and food security
But it’s a very different proposition when private equity sharks, with muscle-boosting names like Fortress and Apollo, launch a direct attack on UK food security and consumers with a debt-fueled bid like the one for Morrisons.
It is frankly startling that the company secretary, Kwasi Kwarteng, has failed to make this distinction between real investments and financially driven transactions.
Words Kwarteng uses in his LBC interview have a tired familiarity. It was the same arguments then-Chancellor George Osborne had gathered when Pfizer made its failed £86bn bid for Astrazeneca (AZ) in 2014.
Without a robust defense by AZ, there might not be a life-saving Oxford-AZ Covid vaccine. The pharmaceutical group has since turned into Britain’s most valuable company, valued at over £130 billion.
Similarly, when Softbank chief Masayoshi Son bought Arm Holdings for £24bn in 2016, he was welcomed to Downing Street as a victorious hero and the deal was seen as support for post-Brexit Britain.
Son’s ambition for the Cambridge-based smart chip maker was taken at face value. No one had foreseen that its Chinese branch would be sold to Beijing and the core of the company put up for sale to rival chipmaker Nvidia.
Morrisons chairman Andy Higginson has somehow convinced Kwarteng that the bidders Fortress, backed again by Softbank and the far-right Koch Brothers, are good guys and can be trusted with the UK’s fourth largest supermarket group , its farms, food production and fishing fleet.
Bradford headquarters can be retained and gives the new owners a veneer of sustainability.
But there’s no avoiding Fortress and his friends striving to buy a supermarket star cheaply and engage in the kind of financial engineering that has devastated large parts of the High Street.
Under the ‘agreed’ deal, Morrisons will be stripped of approximately £300m from financiers and advisers as fees, and the balance sheet will be filled with £5.75bn of ‘interim’ debt.
When Kwarteng arrived as Business Secretary, it seemed like a new dawn. However, urgent reform of the UK audit system is being postponed, and the much-vaunted UK Investment and National Security Act, designed to prevent technology loss, is being watered down.
Private equity thrives on cutting jobs, not creating them. As a student of capitalism, Kwarteng should know that.
Britain has never been shy about sending its alleged financial thugs away to face trial abroad. Rogue Barings trader Nick Leeson was sent to Singapore and the Natwest Three to the United States.
The options for Mike Lynch, founder of technology company Autonomy, are quickly running out. London judge Michael Snow ruled that his extradition to face 17 charges of conspiracy and fraud was not an abuse of process.
The court decided to act without awaiting the outcome of a civil case. It is up to the Minister of the Interior to order extradition.
Thanks to the sale of Autonomy to Hewlett Packard for £8 billion in 2011, Lynch does not have enough money to appeal to the Supreme Court and denies all charges.
The extradition treaty signed in 2003 between the UK and the US is said to be intended for terrorists. It’s hard to believe that those who drafted and signed it failed to recognize that it could be turned against white-collar criminals and other offenders.
Lynch may prefer the softer choice of a Serious Fraud Office prosecution in UK courts.
But it won’t be his choice.
Another escaped private equity’s attention is Ben & Jerry’s-to-Dove champion Unilever.
It has bolstered its independence since ousting Kraft-Heinz in 2017 by ramping up growth in the US, India and Japan and increasing margins by going online, cutting costs, upgrading its brands and strengthening ESG credentials. .
A warning that rising commodity prices will hit margins in the second half of the year caused the stock price to plunge nearly 6 percent.
Who said inflation is transitory?
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