Carlsberg has upped the pressure on the board of UK soft drinks group Britvic to engage on a £3.1billion-plus takeover offer.
Britvic provides bottling facilities for PepsiCo, which has waived a change-of-control clause that could have been a stumbling block to a future deal.
Among the reasons why trade and private equity buyers for UK companies have, in the recent past, been so triumphant in capturing FTSE 350 firms is the vulnerability of non-executive directors to persuasion.
It required a rigorous financial response, such as that put up by Stuart Chambers at Anglo American, to see off predator BHP.
Mining giant Anglo was more prepared than most for the fight because of an earlier skirmish about releasing value with activist Elliott Advisors.
Takeover threat: Britvic provides bottling facilities for PepsiCo, which has waived a change-of-control clause that could have been a stumbling block to a future deal with Carlsberg
In executing takeovers, investment bankers – in this case Nomura – often target non-executive directors.
A lack of quality and less-than-robust attitudes of independent directors is a weakness exploited by buyers.
When it comes to deals, one will hear the target company mouthing all kinds of waffle about fiduciary duty.
There is very little attention to duties enshrined in company law towards all stakeholders, including the workforce, consumers, suppliers and the ill-defined public interest.
Presentations by those propagating the bid focus heavily on director responsibilities. The analysis can be deeply misleading.
UK companies are grotesquely undervalued when compared to American counterparts. London shares have been on something of a tear, rising 44 per cent over the last five years.
That may sound glorious but over the same period, S&P 500 returns are up 114 per cent. There is a huge valuation gap.
Better prepared companies will be armed with a sum-of-the-parts valuation, plus often-ignored brand values (critical in the case of Britvic), which demonstrate the would-be buyer is chancing its arm.
It requires a tough non-executive chairman and board to withstand an assault when the bankers and other advisers hammer away about duty to accept a deal.
In Ian Durant, formerly of Greggs, Britvic has an experienced chairman. Simon Litherland, a refugee from Diageo, has been chief executive for more than a decade. It is their task to see the Danish threat off the field of combat.
Carlsberg has had a serious setback in Russia. Its current goal is to win control of Britvic brands, non-alcoholic beverages and an opening to the valuable Brazilian market on the cheap.
Breath taking
Glaxo chief Emma Walmsley is a huge advocate for UK pharmaceuticals and courageously makes the case for preventative medicine in the NHS.
So it is a blow to find that the Government has chosen Pfizer over Glaxo in the battle to protect vulnerable mothers and the elderly from respiratory disease using an RSV vaccine.
GSK has been trumpeting the prospects of its RSV vaccine as the next big thing after its blockbuster jab for Shingles.
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 out in the firm’s home territory is disappointing. If the NHS were serious about eradicating disease and making sure its patients receive only the best inoculation, it would have chosen the GSK vaccine, which is 10 per cent more efficacious. Pfizer, in seeking to muster support for its alternative RSV treatment, came in with a much cheaper tender.
It is only right that there is competitive bidding for any product. But it is about time Whitehall and an ill-functioning NHS recognised a broader responsibility to provide only the very best treatments to UK citizens.
The NHS also needs to put muscle behind British R&D, science and innovation. The RSV decision is an own goal for UK plc.
Mind the step
High Street stalwart Frasers and online shopping platform THG may be terrific businesses.
But they don’t win many prizes for transparency. So making head or tail of their ‘multi-year’ partnership, without providing financial data to investors, is tricky.
Frasers appears delighted to have acquired access to THG’s much scrutinised Ingenuity platform. And Frasers is taking designer clothing site Coggles (bought out of administration) off THG’s hands.
The mind boggles.
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