Rightmove ought to use ‘pacman’ defence on Murdoch’s raid: ALEX BRUMMER

Until quite recently, there was an unhelpful habit of UK company boards rapidly buckling when faced with overseas and private equity takeovers.

There would be dire warnings from fee-hungry investment banks that failure to accept seemingly generous offers would breach fiduciary duty.

There has been a welcome change of attitude. Several major quoted firms, including electronics retailer Currys, insurer Direct Line, miner Anglo American and engineer John Wood Group, have seen predators off the field of battle.

So far Andrew Fisher, the chairman of online property site Rightmove, is declining to give in to the blandishments of Rupert Murdoch controlled Rea Group. It is showing coolness in the face of a £6.1billion cash and share offer. 

Only the Royal Mail owner, International Distribution Services, held up by regulatory interference, has sought to sell itself off to Czech billionaire Daniel Kretinsky and associates.

There are good reasons for boards and shareholders to hold firm. Most takeover offers are a matter of price, with big battalion long investors and hedge funds new to the share register keen to pocket a profit and scarper. 

The fate of the workforce, the impact of indebtedness and the public interest rarely gets a look-in. Recently, we learned that generous premiums rarely are what they seem.

The discount of London-quoted shares to some of their peers means that assets have been snaffled on the cheap. Sterling weakness also has been a consideration.

Moreover, as has been seen at Asda among others, that when leverage is involved, the outcomes rarely are positive.

The offer from Rea for Rightmove is odd. After all, Britain’s housing market is triple the size of Australia from where the Rea bid hails. 

As attractive as it may be for the Murdoch interests – which control 62 per cent of Rea – to consume Rightmove, giving it a broader footprint, logic says Fisher and his board should launch the ‘pacman’ defence in which the hunted eats the predator. 

Failure to do so speaks to the lack of confidence and ambitions in UK-quoted firms, even in the online commerce sector where the UK, through banks such as Revolut and retailers such as Next, have real heft.

Rea says it can bring skills to Rightmove which it lacks. These include sophisticated data services and access to the mortgage markets. 

Expertise in both of these would be open to a UK company with a willingness to invest. That means convincing shareholders, in for a quick turn, that there is great long-term value to be unlocked.

Deals do not have to be done. There will be setbacks. As we report today, Anglo American shares have not performed well since it showed Aussie miner BHP the door. 

BHP has the option to come back in November. Resetting a complex mining giant takes time and Anglo American is too important to South Africa and the London stock market to be sacrificed. UK plc needs to hold its nerve.

Border dispute

Ahead of the great financial crisis, one of the big gains seen from the European Union was thought to be cross border banking. 

We know how badly that went. The Royal Bank of Scotland takeover of Netherlands-based ABN Amro became the most costly mistake ever made by a UK bank.

HSBC’s swoop into private banking, by buying the Safra banks including Republic New York, proved an embarrassing error which is still being unwound. 

In the Benelux countries, Fortis was one of the major casualties of the 2008 banking meltdown.

Given this history, there is not surprisingly apprehension about the current effort by UniCredit to buy Germany’s Commerzbank. Gaining a foothold in Germany may seem a brilliant idea. 

But an American commercial banker recently in London was dismissive of going there. German investors fear that in the case of problems in Italy’s often unstable economy, resources would always be focused on local clients. German customers might become after-thoughts.

In particular, there are concerns a tie-up between the two banks could hobble lending to Germany’s vibrant small and medium sized businesses.

Experience suggests that cultural differences will be hard to bridge. Andrea Orcel, former boss of dealmaker UBS now at the helm of UniCredit, has unfulfilled ambition. That’s not a good reason for a deal.