Hostile takeovers: The ones that got away...

The battles usually give investors a choice between pocketing the money on offer or gambling on a firm’s prospects. As the deadline for Pfizer to table a formal bid for AstraZeneca nears, we look at how investors have fared over the years in companies that successfully saw off unwelcome approaches

The London Stock Exchange

Is there any company with more deals that never were than the London Stock Exchange? In May 2000 the LSE announced plans to merge with Germany’s Deutsche Börse to create iX.

The deal collapsed under its own weight after igniting a storm of controversy, but the end of the affair triggered a decade in which the LSE batted away bid after bid.

The Nordic exchange operator OM Gruppen, the Australian bank Macquarie, the Paris-based Euronext and Deutsche Börse (again) all made formal or informal approaches.

But none was as tough to beat off as America’s Nasdaq. Having had a £2.4bn approach rebuffed in 2006, the American exchange went out and bought nearly 30 per cent of the LSE’s shares before going hostile with a £12.43 a share, £2.7bn bid .

The LSE swatted it aside, and the Nasdaq sold its shares to Borse Dubai in 2007, abandoning its pursuit.

It can be a little crude to compare a company’s share price now with where it stood years earlier  when an offer was made, given subsequent takeovers, disposals, and dividends paid out. But having broken through the £19 a share barrier at the end of 2007, LSE shares nosedived as the financial crisis gripped the markets. They have recovered more recently, trading at  £18.52 yesterday.

And the LSE has turned predator as well as being prey. It is now in talks to buy RusselI Investments, an American company whose businesses include compiling the widely followed Russell 2000 equity index.

Retail

A Qatari takeover of Sainsbury’s has been rumoured so many times that such talk now raises wry smiles across City watchers’ faces. The investment vehicle Delta Two, owned by the Qatari royal family, had a £10.6bn, 600p a share bid rebuffed in 2007 just months after the supermarket giant had turned down a consortium of private equity firms. However, with the Qatar Investment Authority owning 26 per cent and the Sainsbury’s family around 14 per cent, takeover talks are never far from the market reports. As recently as March, veteran analyst Clive Black floated the case to suggest that Doha should “dust off the file” on Sainsbury’s.

But perhaps retail’s most famous unconsummated deal is Sir Philip Green’s 2004 attempt to buy Marks & Spencer. The full-throttle rebuttal of his 400p a share offer by  the then M&S boss  Sir Stuart Rose even led to a dust -up on Baker Street between the two. M&S shares broke above the 400p level in 2013 after struggling for years to regain the offer price, and 10 years on from the bid they trade slightly above the offer price at 443p.

Insurance

Prudential emerged from humble beginnings in London’s Hatton Garden in 1848 to become one of the world’s largest financial services providers. Yet life could have been even more different had it agreed to a £17bn tie-up with Aviva in 2006 or managed to complete the $35.5bn (£21bn) takeover of rival AIA four years ago. 

Aviva’s offer, valuing Prudential at 708p a share, failed because the Pru’s then chief executive Mark Tucker refused to enter into discussions with his rival. He believed the company was better off alone and continued to expand its footprint across South-East Asia, where today it makes most of its profits.

Mr Tucker tried to buy AIA, the Asian arm of the failed US insurance giant AIG, in 2008 but could not agree a price. His successor, Tidjane Thiam, tried again a year later and agreed a deal – yet failed to convince investors that it was the right thing to do. The bungled takeover process almost cost Mr Thiam his job although he survived and the company’s shares reached an all-time high of 1,440p in March.

Housebuilding

The multi-millionaire founder of housebuilder Redrow, Steve Morgan made an opportunistic bid to take the company private in the summer of 2012 after becoming increasingly frustrated with the perceived undervaluation of the company by the stock market.

Mr Morgan, who holds a  40 per cent stake in Redrow, as well as owning Wolverhampton Wanderers Football Club, tabled a provisional 152p a share bid for the rest of the business in August in tandem with its second-biggest shareholder, Toscafund, and the buyout firm Penta Capital. The deal valued the business at £562m, but other investors, including Fidelity, wanted more money, pushing for 220p a share. Mr Morgan raised the offer to 165p but it lapsed in October amid concerns that the sheer size of the bidders’ stake – over 50 per cent – would also deter counter-bidders.

Happily the story ends well for both Mr Morgan and the rest of the shareholders as less than six months after the aborted takeover, the Chancellor announced the Help to Buy scheme, transforming the fortunes of the housebuilding sector overnight. Redrow’s shares stand at 277.90p, nearly double the original offer, valuing the business at more than £1bn.

Water

They huffed and they puffed but the foreign backrollers of LongRiver, a conglomerate led by Canada’s Borealis, couldn’t blow Severn Trent’s house down with their bid worth up to £5bn last summer.

The investors – who also included the Kuwait Investment Office and British pension group the Universities Superannuation Scheme – tried three times to buy the FTSE 100 utility. They wanted the chance to cash in on monopoly with a gushing income stream.

However, Severn Trent fought back, arguing that the deal “completely [failed] to recognise [its] existing and potential value”. The offer was £22 a share – but today shares are treading water below that, at about £19.

Still, there were some winners. For helping it to stay independent,  Severn Trent’s advisers – including Rothschild, Citi, Barclays, Morgan Stanley and the financial PR firm Tulchan – secured fees totalling £19m.

Engineering

Shareholders in the engineer Kentz might have slapped down executive pay plans earlier this month, but the chief executive Christian Brown can at least argue he got the big call right last summer.

The board played hardball with FTSE 100 rival Amec, arguing in August that its 580p a share offer, which valued Kentz at close to £700m, wasn’t nearly enough.

Amec refused to go any higher, while a potential rival bid from Germany’s M+W Group also fizzled out.

On the day Amec decided to “retain its disciplined approach to acquisitions”, Kentz shares slumped 12 per cent.

However, the company’s share graph has shown a healthy, if occasionally erratic, upward trajectory ever since, peaking at 776.5p in February and still trading more than a quid above Amec’s offer at 693.50p.

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