Lewis’s move on M&B should worry all of us
He’s made a very low offer for the rest of the company, having bought a 22.8% stake super-cheap off Robbie Tchenguiz back in 2008.
He has some old chums who also own a 20% stake in the company who might well be agreeable to rolling over their stake into a private company.
It would mean that Joe Lewis will have netted the rest of our biggest managed pub company, with the best pub sites in the UK, for around £1 a share less that the price in January this year.
A good bit of business, no? In fact, it’s not. It should worry all of us because what’s emerged here is a template for buying one of the UK’s very best businesses on the cheap.
The losers are 60,000 small shareholders and millions of us investing in pension funds that place cash in tracker funds attached to our largest companies.
Nobody I have spoken to believes that Joe Lewis is paying a fair price for M&B. It’s just that it appears nothing in takeover law can stop like-minded individuals who own minority stakes in companies like M&B from exerting a heck of a lot of negative influence.
The two big jobs at M&B — chief executive and chairman — are being undertaken by temps. Six months after Jeremy Blood stepped in as interim chief executive there’s absolutely no sign of a full-time chief executive arriving.
It’s proving remarkably difficult to fill the best job in licensed retail. You wonder why.
A couple of Irish investors, JP McManus and John Magnier, the chums referred to earlier, currently have no representative on the board of M&B despite owning only 3% less than Joe Lewis — his company, Piedmont, has got two on the board and nominated the current interim chief executive as a non-executive director in January 2010. You wonder why.
What has happened at M&B is that day-to-day control has already passed from the board to the shareholders exercising a negative influence.
The Government will need to look very closely at the lessons of M&B because it’s quite clear that nothing illegal has happened here.
It’s just that there is an unfathomable lack of regulation in the cracks and crevices of corporate governance.
At least the previous high roller who was pushing M&B around, Robbie Tchenguiz, had a scheme that delivered a massive windfall to all the shareholders — it’s why the share price touched £9.
The scheme was basically a cash grab and would have ruined M&B in the long term.
It would have loaded £4.1bn of debt on the balance sheet, which, inevitably, would have forced the banks into a £2bn or so writedown at some stage as reality dawned. But at least it made some sort of very short-term sense for the shareholders.
Joe Lewis’s business reputation is that he is ruthless and decisive. It’s about all you need to know.
