TAKE-OVER FOLKLORE

Press, Volume CX, Issue 32382, 22 August 1970, Page 4

TAKE-OVER FOLKLORE

Merger Mama. By William Davis. Constable. 262 pp. (Illustrated.)

(Reviewed by

D.O.W.H.)

The strains and perils of the postwar business world, beset simultaneously by technological change, galloping inflation and a measure of social revolution, provide William Davis with the richly ironic material of his study of British company take-overs. After some years as city editor of various papers ■ (financial journalism is today the “in” branch of the profession), he last year came to rest in the editorial chair of “Punch.” He finds “a lot of humour in finance.” But most of his book is, as they say, too true to be funny. That some individuals—a Charles Clore or a Joe Hyman—have made millions out of takeovers creates an immediate illusion that take-overs must always be vastly profitable and also that the tycoon who puts them through is a predator as dangerous to know as most of the major carnivores. Certainly some

deals have paid off: many have succeeded only marginally. In many the ambitious taker-over has burned his sticky fingers: for at any given moment there are plenty of groggy concerns whose owners are pleased to pass on their problems to someone else. Like any other human activity, take-overs need judgment and skill. While one should not discount the influence of sheer “oneupmanship” (many mergers were “accidental,” “based on a mere whim” of some wellheeled speculator), the spate of takeovers and amalgamations of the last 20 years does derive essentially from recognised weaknesses in British business organisation or from the painful obsolescence of plant or personnel. The Government’s Industrial Reorganisation Corporation was set up (armed with £l5O million) to help facilitate alliances to promote efficiency or increase Britain’s competitive power internationally. The Labour Government displayed enormous “enthusiasm for industrial giants” but treated smaller

businesses in a dreadfully cavalier manner and 90 per cent of British manufacturers are small by comparison, though between them they produce one third of total output. Shareholders rarely need the protection of the State (their role in the competitive auctions which develop may be summed up in an adaptation of an old proverb: “If take-over is inevitable, relax and enjoy it"), but other considerations have inspired government action on occasion to prevent takeovers “in the public interest.” This is an ill-defined term. The proposal that three major British banks should amalgamate was vetoed, as it would have given them together more than half the business of the nation. While the preservation of a competitive situation can be seen reasonably clearly, the vaguer “national” interest is harder to assess and has led in practice to the turning down of a deal which would have given a near-monopoly of ball-bearing manufacture to a firm partly-owned in Sweden. (The objection was to the foreign interest, not to the monopoly.) The investment of American money provides unique provocation for “raising an emotional head bf steam.” The interests of employees are undoubtedly part of the “public interest,” but are hard to protect. The best that can usually be done for those displaced is to provide generous severance payments and facilities for re-engagement elsewhere. Elderly executives are the most indigestible element in redundancy created by mergers. William Davis has written a brisk narrative of take-over fortunes, full of colour and drama. He tells his story in terms of personalities and covers the main battles dashingly enough, ending with the struggle for “The News of the World” and then for the Pergamon Press. (The collecting instincts of Lord Thomson, strangely enough, are hardly mentioned.) But Davis is not so besotted with the news-attracting side of mergers as not to show a deep concern for the state of British industry, in which "excessive fragmentation” had handicapped ability to compete internationally.