Here’s a test for Gabby Logan’s steely negotiating skills. When she’s not sticking a microphone under Usain Bolt’s nose, the BBC presenter has a tidy little sinecure as a director of Perform, the sports media group that runs websites for Chelsea and Aston Villa.
Along with the rest of Perform’s board, the former host of Splash! has been called upon unexpectedly to justify her £48,000-a-year fee. The company is in receipt of a cheeky £702 million takeover offer from Len Blavatnik, its biggest shareholder, who already owns 43 per cent.
Perform occupies a lucrative niche as a middleman in sports broadcasting. It buys rights to popular events, from Serie A soccer to Australian Open tennis, and supplies clips to bookies, traders and media. It also has a collection of online portals, such as Goal.com.
Mr Blavatnik has tabled his offer at 260p a share, the same price at which he floated Perform on the stock market in the spring of 2011. This is an unenticing proposition from the Ukrainian-American tycoon.
In its short life as a public company, Perform benefited initially from City excitement about all things digital. Its shares more than doubled, valuing the business at more than £1.5 billion and prompting a fundraising last summer at 480p a share to raise a war chest for acquisitions. Then came a profits warning, blamed on dismal advertising revenue, that prompted a 60 per cent crash and a hasty exit for the finance director.
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Mr Blavatnik’s offer is a peculiar one. His advisers claim he doesn’t really want to take the business private, merely to buy a few more shares — which he can’t do, under Stock Exchange rules, without issuing a formal bid. We’ve heard this line before, though, from bidders who used it to take control of Rank, the casino operator, and of HR Owen, the car dealer.
Perform’s rise and fall has been an unedifying experience, particularly for investors who subscribed for its overpriced £115 cash-call last year. Ms Logan and her colleagues should kick Mr Blavatnik’s low-ball, opportunistic offer into touch.
Price worth paying
What could you do with a cheque for $17 billion? Build Wembley Stadium ten times over? Foot the bill for all prostitution and illegal drugs in Britain for a year? Or pay Bank of America’s fine for ripping off investors by selling flawed securities containing toxic sub-prime mortgages?
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The penalty, levied by the US government ten days ago, was a colossal sum. It has freaked out Neil Woodford, the usually ice cool fund manager whose impressive record at Invesco Perpetual, his former employer, brought him a shaman-like following among City investors.
Mr Woodford’s new go-it-alone fund has sold its only significant banking position — a stake in HSBC — on the ground that “fine inflation” in the banking industry is running out of control. He reckons that penalties for Libor-rigging, money laundering, sanctions-busting and rip-off trading are being set according to banks’ ability to pay, rather than on the severity of their misdemeanours.
Since 2009, banks in the United States and Europe have paid $210 billion in fines, according to a tot-up by analysts at Morgan Stanley, who reckon that the grand total could increase by $75 billion over the next couple of years. Whatever you may think of the standard of ethics in banking, the sheer scale of this transfer of money from private to public hands gives pause for thought.
JP Morgan has paid $39 billion so far, Lloyds has been hit to the tune of nearly $20 billion and Barclays has coughed up $10 billion. HSBC has got off lightly at $7.5 billion.
This “pick a number, any number” approach to fines is imperfect, but banks wouldn’t keep getting slammed if they didn’t show a cynical aptitude for rule-bending and law-breaking. If influential shareholders are worried about the cost, then the money is hurting — which can only be positive in generating pressure for ethical change.
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Beating the odds
Welcome to the big time, Dave Lewis. The new boss of Tesco arrived in Cheshunt to a bit of good news on his first day: Moody’s, the ratings agency, opted not to downgrade Britain’s biggest supermarket chain any further, in spite of Friday’s profits warning.
Ranked at “Baa2”, Tesco’s credit is on a par with the government of Colombia’s and one level worse than the financial reliability of Russia’s national rail operator. But at least its ranking is stable.
Mr Lewis has an unenviable task: the shares have fallen by 38 per cent in a year and conflicting advice is arriving from all directions. Cut prices! Invest in quality! Shut superstores!
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For those who bet on this sort of thing, the odds suggest he will last only three to four years, the same tenure as his hapless predecessor. For the sake of Tesco’s 510,000 employees, he needs to prove the bookies wrong.