Table of Contents
Carlsberg has increased pressure on the board of British soft drinks group Britvic to accept a takeover offer of more than £3.1bn.
Britvic provides bottling facilities to PepsiCo, which has waived a change of control clause that could have been an obstacle to a future deal.
Among the reasons why commercial and private equity buyers of UK companies have been so successful in the recent past in snapping up FTSE 350 companies is the vulnerability of non-executive directors to persuasion.
A rigorous financial response, such as that presented by Stuart Chambers in Anglo American, was required to scare away the predatory BHP.
Mining giant Anglo was more prepared than most for the fight due to an earlier skirmish over value release with activist Elliott Advisors.
Takeover threat: Britvic provides bottling facilities for PepsiCo, which has waived a change of control clause that could have been an obstacle to a future deal with Carlsberg.
When executing acquisitions, investment bankers – in this case Nomura – often target non-executive directors.
The lack of quality and unsound attitudes of independent directors is a weakness that buyers exploit.
When it comes to deals, you will hear the target company spew all kinds of nonsense about fiduciary duty.
Too little attention is paid to the duties enshrined in company law towards all stakeholders, including workers, consumers, suppliers and the ill-defined public interest.
The pitchers’ presentations focus largely on the responsibilities of directors. The analysis can be deeply misleading.
British companies are grotesquely undervalued compared to their American counterparts. London shares have been in something of a slump, rising 44 percent in the last five years.
This may sound glorious, but over the same period, S&P 500 returns rose 114 percent. There is a huge valuation gap.
The best prepared companies will be armed with a sum-of-the-parts valuation, plus often overlooked brand values (critical in the case of Britvic), which demonstrate that the potential buyer is sticking their neck out.
It takes a tough non-executive chairman and board to withstand an attack when bankers and other advisers argue about the duty to accept a deal.
In Ian Durant, formerly of Greggs, Britvic has an experienced chairman. Simon Litherland, a Diageo refugee, has been chief executive for more than a decade. His task is to see the Danish threat off the battlefield.
Carlsberg has suffered a serious setback in Russia. Its current objective is to gain control of the Britvic brands, non-alcoholic beverages and to open up to the valuable Brazilian market at a low price.
Awesome
Glaxo director Emma Walmsley is a strong supporter of UK pharmaceuticals and bravely champions preventative medicine in the NHS.
It is therefore a blow to discover that the Government has chosen Pfizer over Glaxo in the battle to protect vulnerable mothers and the elderly from respiratory illnesses using an RSV vaccine.
GSK has been touting the prospects of its RSV vaccine as the next big thing after its successful shingles vaccine.
It has regulatory approvals on both sides of the Atlantic. GSK already supplies two-thirds of its RSV protection to the much larger and more remunerative US market.
Losing in the company’s home territory is disappointing. If the NHS was serious about eradicating disease and ensuring its patients received only the best inoculation, it would have chosen the GSK vaccine, which is 10 per cent more effective. Pfizer, trying to drum up support for its alternative RSV treatment, came up with a much cheaper offer.
It is only fair that there be competitive bidding for any product. But it is time for Whitehall and a poorly functioning NHS to recognize a wider responsibility to provide only the best treatments to UK citizens.
The NHS also needs to put muscle behind British R&D, science and innovation. RSV’s decision is an own goal for UK plc.
Be careful with the stairs
High Street stalwarts Frasers and online shopping platform THG can be fantastic businesses.
But they don’t win many awards for their transparency. Therefore, it is difficult to conclude their “multi-year” partnership without providing financial data to investors.
Frasers seems delighted to have gained access to THG’s much-scrutinized Ingenuity platform. And Frasers is taking designer clothing site Coggles (bought out of administration) off the hands of THG.
The mind is stunned.
DIY INVESTMENT PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-to-use portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free Fund Trading and Investment Ideas
interactive inverter
interactive inverter
Fixed fee investing from £4.99 per month
eToro
eToro
Stock Investment: Community of over 30 million
Trade 212
Trade 212
Free stock trading and no account commission
Affiliate links: If you purchase a This is Money product you may earn a commission. These offers are chosen by our editorial team as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investment account for you