RUTH SUNDERLAND: More flips-flops in UK boardrooms that on the beaches

Wet weather, the Delta variant and fraught holiday plans may have made this an August to forget for most of us. 

But in corporate Britain, these drizzly days of 2021 will go down in the annals as the Summer of Sell-offs. 

Globally, nearly 900 takeovers have been announced in the past 12 months, worth a total of $1.6trillion. In the UK, transactions in the first seven months of 2021 hit a 14- year high by value of $198billion (£142billion), according to research by Refinitiv. 

Deals in Germany and France are running at a fraction of the levels seen here. This is not, as some ministers claim, a thumbs-up for the UK economy by overseas investors. It is because foreign predators can see how easily boards and politicians roll over here. 

It is hard to keep up with the firms under siege. Bid battles for supermarket group Morrisons, inhaler maker Vectura and aerospace company Meggitt are making headlines, but the likes of Watchstone, GCP Student Living, Audioboom, Tricorn and Restore have barely registered. This blizzard of bids is a test for boards, for big shareholders and for government. 

Decisions taken now will shape corporate Britain for years. How we deal with these takeovers will have a huge impact on society, the defence of the realm and our capability in key sectors. 

Will we embrace an extreme version of free-market capitalism, even if it means flogging off much of our defence sector, and even if other countries do no such thing? Is it right for the short-term interests of investors – selling to the highest bidder – to trump the concerns of other stakeholders, such as employees, taxpayers and communities? 

Shareholders and boards tout their enthusiasm for ESG, or socially responsible and green investment. But should the concept of ESG be widened to encompass the avoidance of reckless debt, misuse of tax shelters and other chicanery?

These are questions investors and directors should be asking themselves. Instead they seem preoccupied solely with price. 

Sir Nigel Rudd, the chairman of Meggitt, who has sold a string of businesses, says government will have to intervene if a bidder tries to muscle in without binding commitments on investment and jobs. It is difficult for him to do so, he says, because he has a fiduciary duty to shareholders. 

Rudd, who claims he is not in the least bothered by his nickname of ‘Sir Sell-off’, gave a self-justificatory interview in The Sunday Times yesterday on the topic. Yet in several high-profile contests, including the fight for control of Meggitt and also Vectura and Morrisons, neither suitor is remotely desirable. But they have not been sent packing. Bids have been recommended, only for more generous ones to emerge. 

There have been more flip-flops in Britain’s boardrooms this summer than on a Brazilian beach. It suggests chairmen have a shaky grasp on the long-term value of their businesses. 

Yet it is perfectly possible to reject a bid, as engineering group Senior has done repeatedly – so far. Dame Clara Furse, the former boss of the London Stock Exchange, was besieged but saw off all comers. 

Lord Myners, who has said the boards in this country lack ‘stomach,’ repelled an approach for M&S by Sir Philip Green. 

Some boards seem to think their responsibilities are confined to shareholders. However, directors have a legal duty to promote the success of the business, including the consequences of decisions, the interests of staff, suppliers and customers, the community and the environment. It’s time for some deeper thought on takeovers.