Takeover Panel refuses to block foreign buyers

Finance directors and other executives under siege from foreign bidders have
been warned that they should not expect the Takeover Panel to come to their

Speaking at an ICAEW Corporate Finance Faculty briefing last week, Takeover
Panel director general Mark Warham said it was not the responsibility of the
panel to protect UK plc from foreign bids.

Warham’s comments come at a time when there is growing concern that the level
of ownership of UK companies by foreign groups is too high. Over the past year,
foreign bids for UK companies have flown in at an astonishing rate, with Dubai
Ports World buying P&O, Nippon purchasing Pilkington and a queue of foreign
groups lining up to buy the London Stock Exchange.

According to the latest figures from the Office for National Statistics,
foreign investors now own a third of the UK shares listed on the London Stock
Exchange, which are worth £483bn. Of this total, £164bn is held by investors
based in Europe. This is the largest percentage holding recorded to date for
foreign investors.

Warham, however, said the Takeover Panel was not designed to interfere with
foreign bids, adding that it was for shareholders to decide whether to accept or
reject them.

‘There is a feeling in UK that we are “flogging the great firms that defined
our industrial history to Johnny Foreigner”,’ Warham said. ‘It is not the role
of the Takeover Panel to become involved. The panel’s focus is to protect UK
shareholders and leave shareholders to decide the outcome of bids.’

He added that concerns UK shareholders were selling to foreign bidders too
easily were also not of concern to the panel.

‘Whether shareholders are selling too quickly, without providing their boards
with enough time to mount a defence is not an issue for us. It is a matter for
boards to discuss with their shareholders,’ Warham said.

Warham also discussed his frustration with leaks to the press and possible
insider trading. He said 80% of the panel’s time was taken up dealing with
leaked deal information to the press.

‘This is something that is not going away and, if anything, is becoming more
frequent. I do not like to see transactions played out through the press. We
expect all shareholders to receive the same information, at the same time,
through formal channels,’ Warham said.

He added that the panel would continue to work on flushing out bidders and
demanding formal clarifications or retractions on leaked press comments in
effort to maintain a level playing field for all shareholders involved in bid

This task could be made easier with the introduction of the EU’s new takeover
directive, which will grant the panel new powers when it is implemented in May.

The new directive will give the panel the authority to demand that certain
bid information be disclosed, the power to seek financial compensation where it
sees fit, and new enforcement powers.


FTSE 100

BP, the largest company by market cap on the London Stock Exchange, said last
week that its expected tax rate for the first quarter of 2006 would be 35%. The
group said its rate for the full year, however, would remain at 39%. BP added
that the figures in its Q1 trading update did not include detail on the IFRS
requirements for fair value accounting, as these details were not available at
the time.

At this early stage, BP said it still had to compile data ‘that would allow
an estimate of potential IFRS fair value accounting gains or charges, or of any
potential consolidation adjustment’.

Tim Weller, the former FD at Thames Water, has taken onthe FD post at United
Utilities. Weller resigned from Thames last month and has acquired shares in
United as a sign of his commitment to the water and power group. When Weller
left Thames, the two parties said they had ‘mutually agreed’ his departure even
though reports in the press said they had fallen out over the progress of
Thames’ potential £8bn sale.

FTSE 250

Michael Page, the recruitment consultancy, has reportedfirst quarter gross
profits of £79.1m, an increase of 31.9%on £59.9m recorded in the first quarter
of 2005.

The group’s UK business showed a 22.9% increase in profits, which reached
£36.6m. Growth was shown across all sectors, including accountancy. In Europe,
first quarter gross profits were £28m, a 45.3% increase on the first quarter of
2005. In Asia Pacific, first quarter gross profits were £9.8m, 17.7% up, while
in The Americas, first quarter gross profits were £4.6m, a rise of 83.7%.

‘Our first quarter performance this year has been outstanding. While mindful
of the fact that in 2005 Easter fell in March, I am delighted with our growth
rates around the world,’ said Steve Ingham, Michael Page’s chief executive.

Related reading

PwC office 2