The really amusing thing is that the shareholders decided to call for the big boardroom shake-up after they had participated in a meeting called by Deutsche Börse’s dynamic duo in an attempt to make friends, not enemies.
If that is what happens when Seifert and Breuer are trying to be nice, just imagine the reaction when they are being aggressive.
I wrote some time ago that Seifert and Breuer had contrived to produce possibly the worst start to a public-company bidding situation I could remember.
Nothing that has happened since then has changed my mind. Indeed, it looks very much as if they have actually managed to hit a new low weeks into the bid.
It just goes to show why the London market must tread extremely carefully before agreeing to sell its stock market to Deutsche Börse.
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Even if Seifert and Breuer get through this full-on attack from their investors, they will face tough questions from regulators, market participants, and the London Stock Exchange itself about how they would manage Europe’s largest cash equities market.
And the conclusion may just be that the LSE’s future is better off as a separate, independent entity, competing with rather than owned by Deutsche Börse.
That logic could be quite easily extended to the Euronext bid proposal, whatever, or whenever it might land.
Little wonder that more and more people in the City are talking about a scenario that just a few weeks ago seemed implausible — the LSE (share price 571¾p, valuing it at £1.5 billion) failing to pair off.
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Boring BAE
COULD it be that BAE Systems is getting boring? This week it will announce a second set of annual results in a row with, I’m told, no big exceptional charges to irritate shareholders. This is hardly the behaviour we have come to expect from Britain’s biggest defence group, which has long been known in the City as the company where the exceptional was unexceptional.
The nadir for BAE came in 2002, when the Ministry of Defence forced the company to make a statement on the big cost overruns and delays on the Nimrod and Astute contracts.
But that is all in the past, and this week’s announcement should pass without uncovering any nasty black holes.
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There is even talk of a 10% increase in last year’s 9.2p-a- share dividend, but others think BAE’s board, led by newboy chairman Dick Olver, will want to hang on to its cash for acquisitions in America.
The management team, headed by chief executive Mike Turner, got a deserved pasting for the Nimrod and Astute debacle, but has since bounced back.
In the process the company has made itself unpopular with the MoD — note the recent spat over the management of the construction of the Royal Navy’s new aircraft carriers.
Turner and co have also signed off on the next batch of Eurofighter aircraft, sneaked tank-maker Alvis from under the nose of General Dynamics, and sorted out joint ventures with Italy’s Finmeccanica.
Pretty good going, and the shares have reacted accordingly. At 282¾p they are up more than 40% over the last year, and have outperformed the FTSE All-Share by 25%.
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And when set against its American counterparts, BAE shares look cheap, trading on a p/e of 15 compared with the US defence sector average of 24, which might explain why BAE’s biggest institutional investors are all headquartered on the other side of the Atlantic.
Lastminute worry
I AM not normally in the habit of listening to the opinions of Simon Cawkwell, aka Evil Knievel, the veteran stock shorter. But it is worth recounting what happened when one of our team called him last week to see if he knew the source of the anonymous memo sent to newspaper offices rubbishing the prospects of Lastminute.com, the online retailer.
Knievel said he wasn’t the guilty party, but made no bones about the fact that he had, or at least claimed to have, a £1m short position in Lastminute stock. “It will die,” he said. “They will run out of money unless they find some fool to buy them.”
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I might not put it like that, but this paper has been a bear on Lastminute for a long time, much to the chagrin of Brent Hoberman, the company’s chief executive and founder.
I like Brent a lot, but the company’s first-quarter results did not make great reading. Pre-tax losses (before goodwill write-offs) were £9.6m, up from £5.3m in the same quarter the year before, and net cash was halved to £30m.
Of course, the first quarter is always a bad one for travel companies, and Brent’s supporters say it will all come right this year when the results of the company’s string of acquisitions bears fruit.
In addition, there are some encouraging developments. Lastminute has clinched promising deals operating other companies’ travel websites — it does Thomas Cook and Air France — and given the type of deals that have been done in travel this year, there is always the prospect of a cash-rich US company coming in to snap up the brand name. But in the absence of a buyer, the results had better turn round fast.
That £30m cash figure is low for a company of Lastminute’s size. The other thing that perturbs me about Lastminute (share price 108p, valuing it at £368m) is the exodus of talent from the top, starting with Clive Jacobs and continuing with Allan Leighton. People like them tend not to leave healthy companies.
High grocery bill
BUT it is not Lastminute that people want to ask the Post Office chairman about at the moment. In the same way that people keep asking Philip Green about M&S, the question for Leighton is when will he bid for J Sainsbury.
If he were able to talk about it, I feel sure he would question whether it was possible to justify a bid for the embattled retailer when its shares are at 300½p, valuing it at £5.1 billion.
He would love to go for it, and there are several potential backers. But surely not while the company’s share price is so pumped up.