Now you know what to do with that £1.25 billion. Buy a 10 per cent stake in Rolls-Royce and demand a seat on the board. Soon you’ll be on its science and technology committee, apprised of the innermost secrets of one of Britain’s most strategically critical engineering companies.
Sounds a likely story? Sadly not, as Bradley Singer from San Francisco has just proved. He’s the chief operating officer of ValueAct Capital, Rolls’ top shareholder, with a 10.8 per cent stake. His duty is to investors in ValueAct, as Rolls noted yesterday, admitting he “will not be considered to be an independent non-executive director”.
Yet Rolls’ chairman Ian Davis has not only just welcomed Mr Singer on to the board but a key committee. Little wonder two of its shareholders, those corporate governance sticklers M&G and Standard Life, are aghast at such flouting of the principle that investors are treated equally. Since when could you buy your way on to the board of Rolls-Royce, even if it has had constant engine trouble lately: five profits warnings in two years, the sacking of ex-chief executive John Rishton, a halved dividend and a management cull?
Mr Davis, whose three-year tenure coincided with the carnage, doesn’t see it that way. True, Mr Singer may be a talented fellow and from a friendlier school of investing than rival activists. Perhaps it’s easier, too, for chief executive Warren East to have ValueAct on board, rather than lobbing rocks from outside. Yet Mr Davis’s justification for the hire makes him and the board look weak.
Mr Singer, he says, brings “experience of public companies during periods of change”. Yet surely that’s Mr Davis’s forte, what with being an ex-head of McKinsey. Mr Singer also has particular knowledge of America, where Rolls has 40 per cent of its business. Don’t the likes of senior independent director Lewis Booth (ex-Ford) or non-exec Sir Frank Chapman (ex-BG Group) bring that already?
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What about the real reason Mr Singer is on the technology committee: he wanted a seat on one committee and couldn’t do audit, nominations or remuneration because he wasn’t independent. Astonishing, no? Yes, as a US national, Mr Singer will be barred from discussing Rolls’ nuclear engines for British submarines. But a relatively short-term investor will still hear about Rolls’ work on supersonic jet engines. Will he just forget all that once ValueAct sells out and starts agitating for a board seat, say, at United Technologies, owner of Rolls’ US rival Pratt & Whitney? Let’s hope so.
ITV still turned on
Scripted drama is big at ITV. But that doesn’t really justify a full-year results statement 108 pages long. That’s the sort of thing you normally get from a bank, even if there is one crucial difference: ITV makes money rather than pays it out in fines. For that, thank chief executive Adam Crozier. His six-year tenure has turned the loony tunes outfit he inherited from Lord Grade into a cash machine, a point driven home by yesterday’s confident return of £400 million. And not via some stupid buyback, either, but a special dividend because, as Mr Crozier puts it: “We don’t do buybacks. We want to reward shareholders who stay with the company.”
And why would they go? All that talk of television being finished has proved just that. Today ITV is one of the few places advertisers can go to reach a big audience, as this year’s Euros football will prove. And Mr Crozier says 80 per cent of TV is still watched live. Last year saw 877 new or returning advertisers to the box. Tellingly, the biggest TV advertiser was that giant of social media, Facebook. Mr Crozier has achieved another thing, too, lifting the share of ITV revenues not reliant on advertising to 49 per cent, mainly thanks to ITV Studios. Poldark is now shown in 107 countries and Mr Selfridge in 191. Good luck selling that results script, though.
Party for Darty
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Amazing what comes out in the wash. When Kingfisher span off its Kesa electricals business in 2003, it looked as much fun as a night in a tumble dryer. So one half of it proved: the UK bit, Comet, which went bust. Following that, Kesa kept its UK quote but changed its name to Darty after the French half of the business. Then it embarked on an ill-fated expansion spree into the likes of Italy and Spain.
Well, guess what? The slimmed-down Darty is now being fought over by two bidders. A share-based offer from France’s Fnac looks to have been trumped by a 125p-a-share cash proposal from Steinhoff, the South African outfit also trying to foil Sainsbury’s tilt at Argos. Darty shares, up 11.5 per cent at 128½p, are pointing to another thing: at least one more spin.
Poundland’s change
Hard as he tried, Kevin O’Byrne just wasn’t French enough to get the top job at Kingfisher. So the former B&Q UK boss sensibly bided his time before turning up at Poundland, a business looking a bit more bargain basement since the Competition and Markets Authority popped in to waste everyone’s time.
Mr O’Byrne now has the task of integrating 99p Stores, the purchase the CMA’s novice shoppers couldn’t get their pointy heads around. But he’s probably right to spot “great potential” in Poundland. Let’s hope, too, that he brings his experience with Dixons and B&Q to the ranges. Flatscreen TVs and fitted kitchens would be an instant hit with Poundland’s cost-conscious customers.