Michael Harrison's Outlook: As John and Jean decide to get hitched, what's a gal like Clara supposed to do?

Spanish game-plan looks odder still; Tell me why I don't like Mondays
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The Independent Online

Financial services is not on the list of "strategic" industries that France's centre-right government has seen fit to protect from foreign takeover. Unlike, say, yogurt, the sector does not rank as one of the commanding heights of the French economy. So it was that the New York Stock Exchange yesterday unveiled its agreed takeover of the Paris-based pan-European exchange operator Euronext.

Oo la la. Surely not. The press release says this is a "merger of equals". Look how carefully we have carved up the top jobs to make sure that no one is in overall charge.

The two exchanges can say what they like, but the terms of the offer imply that NYSE is paying a premium for control. Its initials have not been placed first in the name of the new company for nothing.

In any event, a merger of equals is an oxymoron. Ultimately, one side or the other emerges on top. Will it be the Anglo-Saxons or will it be the Europeans? And, equally intriguing, how will these two quite different cultures cohabit, divided as they are by an ocean, with a US headquarters in New York, two international headquarters in Paris and Amsterdam and a separate HQ in London to run derivatives trading. At least Deutsche Börse, the rival bidder for Euronext, was honest enough to say that control and power would shift to Frankfurt.

Of itself the ocean does not matter. Capital is the ultimate mobile commodity. The service provided to users is more important than where the trading takes place and on NYSEuronext issuers will be able to watch their stock being traded from dawn to dusk, not just nine to five.

Before they start burning cars in Paris, the NYSE's chief executive, John Thain, and Euronext's Jean-François Théodore would like to make it clear that it is not the traders themselves who will be expected to work 12-hour shifts.

So confident are John and Jean of their business model that they are happy to let the Italians and even the Germans join in - provided they do not expect to run the show.

Which leaves poor old Clara Furse at the London Stock Exchange all alone and on the shelf. A wallflower at the great stock market waltz. She danced with Deutsche and thought about joining Jean and then John and now she's nowhere to go but into the arms of those rude boys at Nasdaq.

She may just prefer life as a singleton while NYSEuronext beds down. A lot more "mergers of equals" fail than succeed, and, when it comes to those which span the Atlantic, the ratio is even worse. Think DaimlerChrysler or, if you want a prize Gallic example, Vivendi-Universal.

In any event, it will take six months for John and Jean to get through all the regulatory hoops and convince issuers on this side of the pond that jumping into bed with the New Yorkers does not also mean importing Sarbannes-Oxley into Europe through the back door.

By that time, Nasdaq will be free to bid once again and, having already got one hand around Clara's waist, it might finally be ready to make an honest woman of the gal, if it can find the money.

Spanish game-plan looks odder still

Ferrovial's tactics have looked odd since it began its long, slow assault on BAA all those months ago, and yesterday's abortive attempt at stake-building on its behalf by Citigroup is no different. If the Spanish seriously believed that a blocking stake in BAA was needed to fend off a potential rival bid from the Goldman Sachs consortium, then why buy now at 900p a share? And why expect institutions to part with their shares at a price which no one seriously expects to be sufficient to win BAA.

A week ago, Ferrovial could have picked up the stock for under £8 after the Office of Fair Trading knocked the stuffing out of BAA shares by warning of a possible investigation into its south-east airport monopoly and there appeared a serious risk of the bid collapsing. That at least would have helped defray some of Ferrovial's own costs should its bid succeed or alternatively banked it a profit should Goldman's come in with a knockout offer.

There again, you might ask why Ferrovial went ahead in the first place and pitched its opening offer for BAA at 810p - a level which had already been rejected by the company and which was significantly below its price in the market.

Ferrovial's bid had stood at 900p, and it remained unclear last night at what price it had pitched a higher offer. Perhaps it genuinely believed that 900p was a fair price for BAA. If it did believe that, and Goldman's decides not to outbid Ferrovial before the deadline of next Friday imposed on it by the Takeover Panel, then the Spanish would have suffered. The 900p offer would almost certainly have failed to reach the 75 per cent acceptance it needs and BAA's shares would fall from the sky. That would leave Ferrovial badly out of pocket from the costs it has incurred by having had a £6.6bn borrowing facility open for the last two months.

Perhaps they have money to burn in Madrid. But if that is the case, why not increase the offer price to a level which would command the backing of BAA's long-term investors? We don't have to wait long now to discover what Ferrovial has left in the tank.

Tell me why I don't like Mondays

The lottery for unlucky people has turned out to be equally unfortunate for its investors. Shares in Chariot, the company behind the Monday Lottery and those edgy TV advertisements, plummeted yesterday after the company announced plans for an emergency placing at 5p, compared with the 115p the business was floated at in February.

There is always an element of lottery in stock market investment, but surely Fidelity and New Star and Chariot's other backers did not expect to be burned this badly quite so soon.

Chariot launched its first Monday Lottery in April with ambitious plans to raise £150m a year for Shelter, the British Heart Foundation, the Royal National Institute for the Deaf and the 60 or so other charities backing it.

Chariot also promised to those who took part that more pence in their pounds would find their way to good causes than Camelot achieves with the National Lottery. Sadly, Chariot's financial projections have proved as wildly off-target as the knife-thrower in those TV ads. In its first four weeks, the Monday Lottery sold less than £2m worth of tickets, raising a total of £520,000 for charity when the target was £3m a week.

The collapse in the share price, from a high of 210p to last night's close at 8p, leaves some awkward questions for Chariot's nominated financial adviser, Noble & Co, to answer. It also leaves Tim Holley, the non-executive chairman, with plenty of egg on his face. It is not as if Mr Holley is a novice to this game - he is, after all, a former chief executive of Camelot. Perhaps if he had consulted his former employers, they would have told him he needed to sell two million tickets a week just to break even.

Still, the pain has been evenly shared. The collapse in Chariot's price has also put paid to the £10m in share bonuses Mr Holley and his executive colleagues were looking forward to. It seems that everyone involved in this venture has been unlucky.

m.harrison@independent.co.uk

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