It's a bit rich for this Government to start preaching to institutional investors about long-term thinking.
The tireless Mandelson is at it again. This time he’s summoned big institutional investors to a summit to give them a wigging about their role in City takeovers. The FT reports that shareholders are bracing themselves for Lord M to put the heat on them not to sell 'their shares for short term gain, and to put more weight on the long-term prospects of companies in which they invest'. You’d burst out laughing if it wasn’t enough to make you weep.
It really is cute that suddenly Mandelson and New Labour are coming over all Germanic in their outlook: serious, conservative and looking to the long term. He has a serious credibility problem here, though. Despite the downturn and the need to adapt attitudes towards business, the Government cannot have it both ways. The way in which this regime has allowed its tune to change from laissez-faire to interventionist does not compute. You either embrace the market and let vile capitalism do its work or you don’t. You can’t be French and American at the same time.
It’s all very well to berate institutional shareholders for being tempted to make a quick buck from Kraft, but any gains are welcome these days. If, as a big fund manger, I was currently sitting on a large tranche of Cadbury shares, I’d be sorely tempted to take Kraft’s shilling and bank the proceeds. I’m responsible - indeed I have a duty - to try to grow the pension pots of my members, and I reckon in the current climate that a bird in the hand is worth two in the bush. If Kraft goes away, bruised and defeated, the latter day Quakers of Bournville may have scored a victory for John Bull, but the first result will be that Cadbury’s share price plummets. You or I may not like it, but that’s the way it works.
Dedicated readers will recall that we ran a very interesting roundtable a year ago about this very subject with Tomorrow’s Company, called 'Whose company is it anyway?' With some great contributions from the likes of Sir John Egan, Will Hutton and Adrian Beecroft of Apax, we looked at the vexed question of 'stewardship' - and asked how the casino economy short-termism of the Noughties dragged us into the mire.
And, while we’re on the subject of short-termism, and flogging off the family silver in search of short-term gain... It’s time to remind HM Government that it hasn’t exactly been blameless in this area. What about the utilties, DERA or Westinghouse? What about the fact that our whole nuclear power industry was flogged off on the cheap, and now that we need to build a load of new reactors fast, we no longer have the know-how - because in the private sector the industry has withered to nothing? (The French find this highly amusing, and are waiting to cash in big time as their nuclear engineers pile on the Eurostar to show us the 21st century way to set to with the uranium).
