Putting a brave face on a crushing strategic defeat is not the way Nigel Rich would have liked to celebrate his first year in office. But a 40 per cent fall in the value of Trafalgar's ordinary shares and a 25 per cent slide in the prefs that would have funded any deal gave him little option.
That is not, of course, the gloss the company put on its shamefaced withdrawal. Predictably, the blame was laid firmly at the door of Professor Stephen Littlechild, whose announcement that he planned a tight new pricing regime three days before the original pounds 11-a-share bid was due to close shut out Traf's small window of opportunity.
Hanson and the other two bidders to have caught the REC bug were also brought to book for their unsporting behaviour in bidding up the ante beyond the company's reach. Setting a benchmark of 975p earlier in the week, Hanson effectively tore up Trafalgar's membership of the electric club.
Mr Rich's excuses are lame and unconvincing. It hardly needs Moody's action in putting the company on credit watch to underline the real reasons for the withdrawal. The fact that Trafalgar's 26 per cent shareholder Hong Kong Land now shares the debt rating agency's worries - five months ago, it was prepared to underwrite the bid for Northern, now apparently it is not - confirms the deterioration in Trafalgar's position this year. Swiss Bank Corporation, the company's adviser, did everything it conceivably could barring shelling out the money itself to facilitate a new bid. The fact that Trafalgar still couldn't go through with it suggests there must be something seriously wrong.
The new team in the company's deceptively smart Mayfair headquarters is secretly hopping mad that it came so close only to lose its prize. The cost of the bid to the half-time profit and loss account was officially pounds 12m, but the price in lost management time at a critical moment in Trafalgar's history is incalculable.
The question now exercising minds is whether Trafalgar can pull through on its own, without the cascade of cashflow from Northern's captive customers. What the managers of its existing divisions would do for such a cossetted existence.
It is hard to imagine a worse rag-bag of clapped-out industries than the one presently housed by Trafalgar House. The construction industry is on its knees, the upturn in housebuilding has run out of steam and the top end of the luxury cruise market is flagging. Long, unpredictable contracts compound the engineering division's deep-seated management problems to make recovery there a long, hard slog. Even the Ritz is going to close soon for refurbishment.
So it's back to square one for Trafalgar. There will be no quick fixes to its profound problems and it is unclear whether the company can hold on long enough for Nigel Rich's surgery to take effect. Already a rich man from his days at Jardine, Mr Rich took up the challenge of Trafalgar when many others would have settled for champagne and the golf course. A great deal of money and face rides on his gamble.
An achievement, but not a renaissance
Michael Heseltine is justified in throwing modesty to the winds and trumpeting his own and the Prime Minister's success in bringing the pounds 1.1bn Siemens microchip project to Tyneside. To attract such a prestigious high-tech investment to Britain - this from a company which should by rights have been looking to its roots in Central Europe for suitable locations - is a personal achievement for Mr Heseltine and a considerable vote of confidence in the UK economy. The long-term economic benefits are also considerable, providing a yearly boost of nearly pounds 1bn to Britain's balance of trade in exports and import substitution.
It is small wonder that the decision has prompted a bout of soul-searching and self doubt among German finance and industry ministers. Apart from the delights of Wimbledon, where the Prime Minister is said finally to have persuaded Heinrich von Pierer, chairman of Siemens, against alternative Continental sites, why has Siemens opted for Newcastle? Tyneside has an impressive record in attracting high-technology investment, Samsung and Fujitsu being two of the most well-known names to locate there over the last year. Siemens will complete the region's transformation from ships to chips, from sunset to sunrise industry.
But why Britain and not Germany or Austria? The amount of state aid no doubt played a part. Mr Heseltine was being decidedly coy about this yesterday, though he did dismiss German estimates of pounds 200m as excessive. Siemens also believes it should have a more considerable presence in Britain, which is apparently the third largest chip market in Europe and the sixth largest in the world. An investment in the UK fits more neatly with the company's strategy of spreading itself internationally. The strong mark and Germany's high labour costs also played a part. On the other side of the coin, Britain's own highly flexible labour market and its now excellent labour relations were, according to ministers, a big factor. Though domestic perceptions of the UK economy are still gloomy and pessimistic, the overseas view is much more sunny, with inflation apparently under control and respected international organisations like the OECD now queuing up to heap praise on our economic management.
What else does this decision tell us about the UK economy? For those who still dream of a viable economic future outside Europe, it tells us that Britain is now irredeemably and irreversibly attached to the Continent. Siemens, and the rest of the inward investment in Britain over the last five years, would not even have considered the UK if it were thought there was any prospect of withdrawal from the EU. It is also, however, symptomatic and indicative of the weakness of our indigenous industry that it is to overseas companies that we must now look for investment of this sort. There are some notable exceptions - Glaxo's research and development facility at Stevenage is one - but spending on this scale by UK companies on cutting- edge technology projects is rare. Britain opted out of large-scale micro electronics 20 years ago; it is now too far behind to catch up. It is difficult to imagine GEC, Britain's premier electronics company, engaging in a greenfield investment of this sort; culturally, it would seem completely alien.
So while Mr Heseltine is right to trumpet his success, it can hardly be claimed as evidence of an economic miracle. Britain's own industry and companies are still stuck in cautious, retrenchment, short-termist mould. Not until our own businessmen change their ways can ministers properly lay claim to an economic renaissance.