Maybe not today, maybe not tomorrow
The connection between Scunthorpe, Port Talbot and Milan may not be immediately apparent but Roman Abramovich seems to have had his eyes on all three if reports coming out of Russia are to be believed. Fresh from paying £30.8m to lure away AC Milan striker Andriy Shevchenko to Chelsea, Mr Abramovich appears to be returning to his older interest in metals with an approach to Russia’s Evraz that may, in turn, rekindle merger hopes with Corus – whose workers in Yorkshire and Wales barely earn that between them.
Others were more sceptical yesterday and one thing is certain: if a deal were imminent, Thursday’s rumours and share price reaction should probably have forced the Takeover Panel to demand a statement from Corus. Nevertheless, this company has form for flirting with exotic characters from far flung places and a deal of some sorts looks more likely than ever.
With consolidation continuing apace among the very biggest steelmakers, and market conditions remaining as buoyant as they have been in decades, rather lacklustre results from Corus on Wednesday show it cannot afford to remain on the sidelines for long.
This plucky survivor has come a long way from the dark days of the last downturn when it nearly disappeared down one of its own furnaces. But surviving the next downturn should be its number one priority now. A rare opportunity to dictate the terms from a position of strength may even mean this does not have to end in another foreign takeover but could be a more flexible alliance or true merger.
The irony, of course, is that is what they said when British Steel merged with Dutch rival Koninklijke Hoogovens in 1999 to form Corus in the first place.
BAA reaches runway
Even with the Takeover Panel rulebook to keep the plot fizzling along, there is always a danger during protracted bidding wars of nodding off just when things get interesting. After sitting on the tarmac for what seems like an age, the moment has finally come, with Ferrovial’s bid for BAA, to strap yourselves in and brace for action.
Over the next 36 hours or so, the Spanish-led consortium has to decide whether to raise its 900p offer to flush out a recommendation from BAA’s management or reach the end of the runway with not enough power for a successful take-off.
Marcus Agius, BAA’s chairman, is a 34-year veteran banker from Lazard who has been here before. So, while he is unlikely to be panicked into an early recommendation, the right amount of cash inducement could easily bring this to a swift conclusion.
BAA has not been under attack for quite as long as the London Stock Exchange of course and it shows.
The really important difference between this year’s two liveliest bid targets is the shape of their shareholder registers.
While the LSE saw a band of loyal institutions sell out at the last minute, BAA has kept hold of the bulk of its traditional pension fund and insurance investors.
Arrayed against them are an impressive list of hedge funds, usually in this sort of situation for a fast buck.
But the roles are not quite as clear cut as either side would like to make out. As the LSE showed, loyal institutions such as Threadneedle can always be persuaded to sell out when the price is right. “Anything north of 950p starts to get very interesting” were the words of one City fund manager recently. On the other hand, the prospect of further bids or the excitement of a competition review could be just the sort of gamble that might appeal to some of the more long-termist hedge funds.
Only when we reach the very end of the runway on Monday will we know for sure if this bird can fly.
Even then, Ferrovial may decide to persevere with the 900p bid already rejected by BAA. With current investor sentiment, that looks like the crash-and-burn strategy.
Is foreplay so shocking
The collision of almost every known telephone, internet and digital TV company in the middle of the highly competitive household entertainment and communications market has rightly raised some scepticism.
While Richard Branson boasts of bundling fourplay services (mobile, phone, TV and internet), others question whether customers can really stomach seeing all these costs added up on their bill at the same time.
Consumer psychology is an important question but experience in other industries suggests this so-called “price shock” may not be quite so frightening. While not essential for anyone truly on the breadline, broadband and mobile phones are thankfully no longer considered luxury items – any more than watching Sky Sports is for many.
Once people realise they have to pay for these pleasures, adding them up is no scarier than getting to the check-out at Tesco.
What matters is convenience and price – though not always in that order.
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