Takeovers, Mergers, and Market Moves: Insights from the Financial Sector

Strategic Insights -

The London Stock Exchange has seen significant activity in the financial sector, with major players announcing takeover bids, mergers, and acquisitions. Meanwhile, the government has faced criticism over its handling of industry regulation, job losses, and market failures.

Key Takeaways:

  • Chase Manhattan has offered an estimated £3 billion to acquire Robert Fleming, one of Britain's few remaining independent investment banks.
  • Gordon Brown's fourth Budget promised a substantial increase in spending on the NHS, but was criticized for failing to impress business, with estimated costs exceeding £300 million.
  • High street banks have been accused of ripping off customers to the tune of £5 billion in a review of the banking industry by Don Cruickshank.
  • The Office of Fair Trading launched an inquiry into the restrictive practices of lawyers and accountants, questioning whether the £25 billion professional services market should continue to be exempt from the Competition Act.
  • Hutchison Whampoa sold a £3.2 billion stake in Vodafone AirTouch, with Deutsche Bank and Goldman Sachs orchestrating the biggest "bought deal" seen on the London Stock Exchange.
  • Alchemy's break-up of Rover continued to embarrass the Government, with Stephen Byers, the Trade and Industry Secretary, unable to secure significant concessions from BMW.
  • BMW's proposed takeover of Rolls-Royce was called into question after the luxury car company reported 1999 pre-tax losses of £136 million.
  • Shares in lastminute.com endured a volatile week, eventually ending at 332 1/2p, 47 1/2p below the issue price.
  • Michael Saylor, the 35-year-old founder and chief executive of America's MicroStrategy, lost a paper fortune of $6 billion (£3.8 billion) when shares in his software company went into freefall.
  • Scottish & Newcastle acquired Kronenbourg, France's best-known beer, in a deal worth £1.8 billion.
  • Halifax offered staff of St James's Place Capital a £33 million golden handcuff as part of a £750 million takeover of the financial services group.
  • BG is preparing for another demerger, seeking a separate listing for its exploration and international gas business, valued at about £7 billion.

Statistics:

  • Estimated cost of changes to rules on controlled foreign companies and double taxation relief: several billions of pounds, well in excess of the Inland Revenue's projected cost of £300 million.
  • Estimated cost of High street banks ripping off customers: £5 billion.
  • Value of Hutchison Whampoa's stake in Vodafone AirTouch: £3.2 billion.
  • Losses reported by Rolls-Royce in 1999: £136 million.
  • Value of lastminute.com shares at issue price: 380p.
  • Michael Saylor's paper fortune lost: $6 billion (£3.8 billion).
  • Value of Scottish & Newcastle's acquisition of Kronenbourg: £1.8 billion.
  • Halifax's golden handcuff offer to St James's Place Capital staff: £33 million.
  • Value of BG International: £7 billion.

Sources:

  • The Times, 2000.