Morning:
10°c
Phone the offices of the City Takeover Panel in Paternoster Square and be immediately made aware this is an institution which does not lack self-importance. Candour, perhaps, but not self-importance.
Since 1968, the role of the Panel on Takeover and Mergers (its full title) has been to ensure that shareholders are treated fairly during bids and that bankers play by the rules.
Since the Panel itself is heavily composed of former bankers or bankers on secondment from their day jobs, you can assume they have a sympathetic ear for colleagues, but I suppose the point is that they have experience of City matters.
In theory, folk engaged in takeover bids take the Panel's machinations seriously and try to avoid its censure.
Investment bankers would certainly rather stay on its good side, but on the other hand, if it's a choice between losing a deal or enduring a slap on the wrist from the Panel then there's no contest.
For the public relations folk driving bids behind the scenes it has almost become a badge of honour to earn a rebuke — a good tale to be told over champagne later as victory is being celebrated.
Since the Panel has seldom been known to have intervened in any meaningful way, it's tempting to conclude that its real purpose is to act as a fig leaf of respectability for the behaviour of investment bankers. Its job is to make their life easier.
Which brings us to its latest supposed investigation into Kraft's takeover of Cadbury (the Panel doesn't comment on investigations or much else).
When the food giant first launched the bid last autumn, one of its claims was that it would reverse a decision by Cadbury to shut a factory in Somerdale at the cost of 400 jobs.
“We believe we would be in a position to operate the facility,” said Kraft's statement to the Stock Exchange on 7 September.
This looked like convenient prattle back then as some of us pointed out, a PR tactic to be forgotten as soon as it suited Kraft.
Having secured its deal, Kraft quickly reversed this pledge and is shutting the factory after all.
After complaints from the local MP, the Panel is now said to be looking into whether Kraft misled investors and the wider public.
The answer is clearly yes but we can expect several weeks of pontificating before the Panel reaches a conclusion which won't affect the outcome of the deal in any case.
Interestingly, one of Kraft's top advisers on the Cadbury deal was Lazard's Peter Kiernan, who had been appointed the next director general of the Takeover Panel.
This appointment has been delayed says a little-noticed statement “pending completion of some ongoing matters”. We can assume that's the final box-ticking of the Cadbury deal, though as usual the panel won't elaborate.
If Kiernan had started at the Panel, he would by now have been investigating himself (presumably hoping that he wouldn't find anything out). What are the chances of stand-in director general Philip Remnant (a senior banker at Credit Suisse) issuing a serious telling off to the incoming DG?
Exactly.
Politicians and senior business people including Cadbury chairman Roger Carr have lately been musing that British companies are too vulnerable to takeovers and pondering what can be done.
How about giving the Takeover Panel some teeth and some legal authority? And how about saying that most of the experts on the Panel should come from outside the City? Bankers, it is surely uncontroversial to say, do not have a monopoly on wisdom.
IG's rise just another nail in LSE's coffin
Tim Howkins admits it's a sad habit, but he can't help himself.
His day of rest always starts the same way, scanning The Sunday Times list of the top 200 companies in the UK to see how his own, IG Index, is faring.
This week the spread-betting house is listed at number 132, with a market value of £1.5 billion.
Howkins, chief executive since 2006 and finance director before then, has a burning ambition to get IG into the FTSE 100. He's betting that IG will pass the London Stock Exchange moving in the other direction.
When IG overtakes — it seems inevitable — it will signify two things: that spread-betting has arrived as a mainstream activity, as part of the establishment, and that the LSE is heading for eclipse.
This week the LSE is 112 on the list and therefore a strong candidate to be shoved out of the Footsie when the number crunchers get to work on today's quarterly review.
It's hard to see any way back to the premier league for the exchange — IG and Co are eating its lunch. Only three years ago, you will recall, America's Nasdaq offered £2.7 billion to take over the LSE. That's £800 million more than it is presently worth.
