UK PLC For Sale

Sir Nigel Rudd is in the news again for selling off some more of UK Plc to foreign competitors. This time he has disposed of the hi-tech railway signalling and control equipment business of Invensys for £1.7bn to German competitor Siemens, recipient of the government’s £1.4bn Thameslink rail contract, in preference to Derby based Bombardier.

Rudd has himself been mentioned a couple of times on this site. He was Chairman of Boots the Chemist and oversaw its disposal to a private equity operation, got it saddled with most of the debt raised for its acquisition, and moved its registration to the tax avoiding Swiss canton of Zug (see http://www.gordonpearson.co.uk/11/what-will-replace-the-public-company/). The other mention was as a member of David Cameron’s special advisory committee of ten on economic strategy (see http://www.gordonpearson.co.uk/21/limits-of-economic-advice-to-the-coalition/). He was one of the asset stripping accountants on the committee. Asset stripping is in his blood, his speciality since he started out in 1982 at Williams Holdings. It is curious how our politicos reward such activity with knighthoods and ask such people for their advice.

The following extracts are from an article on the asset stripping business written 40 years ago for the New Statesman. It poses the question: “Are the City strippers, politicians and press all feeding at the same trough?” Some things never seem to change.

CITY STRIPPERS
The recent announcement by Barclay Securities that they are closing down three factories at Redcar, Erith and Harbourne, throwing 750 people out of work, further highlights the activities of the asset stripping segment of British industry.

Last month the boss of Barclay was quoted in The Times as saying “the theory of what we are doing is to release half the cash, half the assets and half the number of people employed”. Some theory! … The fruits of stripping are real enough for the individual company. Barclay’s profits last year showed an increase of about 170% over the previous year. The dividend for the year will be up 50%. The share price went from a low of 69p to a high of 227p. At the cost of a few hundred jobs, the chairman and major shareholder has become a multi-millionaire. …
The City Takeover Panel is the laughable body which presides over these abuses. …

“Releasing” half the people and half the assets and cash is a fairly cynical exploitation of the country’s resources. Factories which are making a worthwhile contribution to the economy are closed down or sold off merely to satisfy the cash needs of the stripper. … The basic philosophy has been succinctly stated by Mr Slater: “We’re not interested in making things, but money.” Why would he invest in making things for an uncertain return of around 10-15%, when he could invest in a takeover, get half his money back immediately by releasing people etc, and show a return of 25% or more on the remaining investment. …

An earlier acquisition by Barclay Securities was Dorland’s advertising agency which owned a City property that was scheduled as being of historic interest. Barclay had the property revalued on the basis of its development potential, ignoring its scheduled status. That enabled them to claim a huge surplus on the deal. The initiative for this acquisition came from Slater Walker. Since Mr Walker is the Minister responsible for historic buildings, the impression was given that the rules were being broken for the benefit of his rich and powerful friends. The Daily Mail were at the time campaigning on behalf of threatened scheduled buildings, but they were apparently not concerned over this particular one and declined even to acknowledge correspondence on the subject. …

Are the City strippers, politicians and press all feeding at the same trough?

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