HomeBusinessMoneyRUTH SUNDERLAND: Outcome of LV vote will deter buyout barons

RUTH SUNDERLAND: Outcome of LV vote will deter buyout barons

This newspaper has campaigned vigorously against the takeover of LV by private equity firm Bain Capital, along with politicians from each side of the House. 

Unable to garner enough support from their own members, LV’s hapless bosses yesterday were forced to abandon a deal that offered little benefit to anyone but themselves. 

Above all, this is a victory for the LV savers who made their voices heard and for the mutual movement, which has been under siege for the past three decades. 

Under siege: this is a victory for the LV savers who made their voices heard and for the mutual movement

The real culprits in the saga are not Bain but LV’s chairman Alan Cook and chief executive Mark Hartigan, who had been hoping for a well-cushioned future with Bain but handled the process atrociously. 

Cook is leaving, and Hartigan cannot be far behind. LV does not set a precedent for private equity defeat but it will give pause for thought. 

The clue’s in the name with private equity: firms deeply dislike public scrutiny, preferring to work in the shadows. This will make buyout barons think a lot harder before swooping on UK companies that have until now seemed easy meat. It will also be a deterrent to bosses who think they can sell out their customers with impunity. 

Fallen star 

Few in Whitby, I suspect, will shed a tear for Chris Fraser, the Australian investment banker who founded Sirius Minerals.

It must have been a bruising experience for him to see the ambitious Woodsmith fertiliser mine he conceived slip out of his grasp. Not half as painful, though, as for the 85,000 small shareholders, many of them local, who have lost large chunks of their life-savings in a deep dark pit of broken promises. 

Anglo American, the FTSE 100 mining giant which bought Sirius in a rescue takeover in March last year, has removed Fraser from Woodsmith. He has been shunted onto what are diplomatically described as ‘strategic projects’. Woodsmith will now be overseen by a capable-sounding chap called Tom McCulley, who has led Anglo’s huge Quellaveco copper development in Peru. 

The Anglo takeover, at the equivalent of 5.5p a share, infuriated many small investors who had purchased their holdings at the peak of around 45p. 

The latest accounts, however, reveal Anglo has written down the value of the Sirius assets by nearly £540m, significantly more than the £405m it paid. 

Fraser’s exit, along with other mood music, suggests turning the project around may be harder than Anglo initially thought. 

It commented yesterday that a ‘number of elements of the project’s original design would benefit from modification’, which sounds like corporate-speak for a total mess to sort out. 

The PR toiler who came up with that deliciously dry statement deserves an award for services to euphemism. 

Despite his defenestration, Fraser himself has done pretty well out of Woodsmith, having made nearly £5m between 2011 and 2018 from salary, bonuses and shares. 

His scheme to sink a mile-deep mine in a national park, and to construct a 23-mile tunnel to a port on Teesside, was always risky if not vainglorious. Everyone wanted him to succeed, because it could have delivered much needed jobs and wealth to North Yorkshire and Teesside. It still could. Anglo has brilliant mining expertise, honed over many years around the world, coupled with a big balance sheet. Even so, Woodsmith is quite the challenge.

Bleak midwinter 

Optimism is an essential quality for entrepreneurs, along with adaptability and resilience. All of these have been on display in spades since the pandemic broke out. 

Yet the latest figures, showing the economy grew by just 0.1 per cent in October, cannot be anything but dispiriting. It shows just how fragile and tentative the recovery is – and bear in mind, these numbers are for a period before the Omicron variant. 

Firms are going to be hammered in the pre-Christmas period, when many make a large proportion of total annual profit. 

Then in spring they will be hit by National Insurance and corporation tax increases. If the Government continues to impose restrictions every time there is a new variant, it will cause untold damage to the economy. 

People will become hooked on WFH, and productivity and customer service will suffer. Instead of the knee-jerk lurch back into WFH, why not pour some energy into finding solutions to help business carry on as normal, such as helping small firms provide daily tests for staff? The approach should be positive, not prohibitive. 

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