A Midland business expert has welcomed the Business Secretary’s call for tougher rules on takeovers.
Birmingham Post blogger Professor David Bailey, from Coventry University’s Business School, has been saying for many months that the Government should bring in measures to give firms more protection from hostile takeovers, whether by British or foreign firms.
He said he was pleased at reports that Lord Mandelson wanted to see legislation strengthened.
Prof Bailey said: “I am pleased that Lord Mandelson has finally seen sense but it has taken something like the Kraft takeover of Cadbury to make him realise that something needs to be done, and fast.”
Lord Mandelson was speaking at the annual Trade and Industry dinner last night and outlined a number of ways to tighten up rules on takeovers including forcing bidders to reveal how they intend to finance the takeover and raising the voting threshold to secure new ownership to two-thirds.
Professor Bailey added: “It’s a sad fact that most takeovers fail to deliver the benefits that bosses at the takeover firm claim, and certainly don’t usually benefit their shareholders, even before we consider the wider economic and social impact. Profits usually stay the same or go down despite the huge outlay on the takeover.
“I would like to see a public interest clause into UK competition law which puts the onus on takeover firms to prove a public interest benefit from the takeover.
“I would reduce the trigger point for firms having to notify the target firms of their intentions to give the target firm more time to defend themselves and I would call for using the tax system to better reward long-term share holdings.
“Overall, we need to change the system so as to promote long-term, active shareholder activism as the key driver of effective corporate governance and management performance, rather than the takeover bandwagon which benefits a few but does nothing for business efficiency and causes wider social and economic damage.”