ALEX BRUMMER: Melrose finds new ways

Over the last two decades, the FTSE 100 and Britain have been denuded by nodding dog directors too feeble to put up a fight to save emblematic companies and flaccid shareholders mesmerised by cash and short-term returns.

The country’s corporate tax base has been eroded and great technologies and skills have vanished over the horizon.

The assault has done real damage to infrastructure, contributing to overcrowded airports, sewage pouring into our rivers and a failure to invest to secure energy supplies.

On a few occasions a spirited defence – AstraZeneca is the greatest example – has seen a significant company saved. BAE Systems remained independent through serendipity as a compliant board sought to steer the UK’s leading edge defence company into the sclerotic hands of Airbus. Sale of the great Cambridge smart chip company Arm Holdings was brokered in Downing Street by Theresa May and Philip Hammond.

Amid this tumult, this paper has never wavered in its belief that most foreign takeovers have been disastrous for productivity and growth.

There are notable exceptions such as AkzoNobel’s deal for the rump of ICI (it has continued to invest heavily in Britain) and Tata ownership of Jaguar Land Rover.

No one should miss the irony that among the latest bid targets is the payments firm Network International, with a focus on fast growing Middle East and African markets.

The company is the brainchild of Ron Kalifa, founder of payments champion Worldpay, who wrote a report for the Tories on how to gear up the UK’s dynamic fintech sector. Dangling the cash in front of Kalifa’s eyes is former governor of the Bank of England Mark Carney in his role as chairman of Canadian buyout firm Brookfield.

Among the most bitterly fought battles of recent times was the hostile £7.4billion Melrose takeover of long established industrial group GKN in 2018. Success for Melrose was secured at the last minute by the narrowest of margins. Melrose is best known for its private equity approach, which has delivered fabulous riches for bosses, and its buy, improve and sell model.

The fight against the bid focused on the latter two pledges. ‘Improve’ has often meant savage cost cutting rather than R&D and ‘sell’ mostly has seen UK engineering assets end up in overseas hands.

Our campaign against the deal was not cost free. Senior Melrose executives (and partners) chose to disparage the Daily Mail rather than choosing to accept there was a respectable case against the deal. Reporters were the recipients of hostile emails from advisers.

But one could not be more delighted to see GKN’s automotive arm Dowlais, with its powertrain for electric vehicles, return as a premium listing in London.

The sharp drop in the float price may be disappointing, but a valuable piece of British technology and some important R&D has been saved for the time being.

It may be overreach to suggest that Melrose bosses Jock Miller, Simon Peckham et al have learnt from the scalding experience of a contested takeover and the late stipulations placed on the deal by the Government. It is hard to think that didn’t play some role in the decision to IPO rather than sell to the Americans.

As matters stand, Melrose is a standalone UK advanced aerospace firm with a heritage that includes the Spitfire.

The UK’s aerospace sector has been hollowed out by overseas and private equity deals, with flight refuelling pioneer Cobham, satellite innovator Inmarsat and components group Meggitt among those dispatched. Melrose has the opportunity to turn the tide of history by keeping GKN aerospace British.

Blanc blast

It is not surprising to see Amanda Blanc of insurer Aviva leading the cavalcade of departures from the sex, drugs and rock and roll-infested CBI.

Blanc is a no nonsense chief executive never afraid of taking a stand. Last year she stepped down as chair of Wales’ Professional Rugby Union Board, later saying she was not listened to by male counterparts.

In spite of driving Aviva’s share price upwards, Blanc faced disobliging exchanges at the AGM, with one shareholder complaining she was not ‘the man for the job’.

Blanc may well prove the pivotal departure as the CBI collapses in plain view/