Business review of the year

Markets reached unprecedented levels that started with a bitter battle for Forte and ended as they began, with another controversial takeover row


The new year starts as the old one ended with one of the most bitterly contested takeover battles of recent times - Granada's hostile tilt at the Forte hotels and restaurant group. But 1996 is barely a week old when a new storm hits the City. The Stock Exchange sacks its chief executive, Michael Lawrence, saying he had lost the confidence of its member firms and the board. A City outsider, Mr Lawrence had tried to push through unpopular reforms at the Exchange and trod on too many toes.

Woolwich Building Society follows the Halifax with plans to become a bank and seek a stock market listing. More than 3.5 million members look forward to their share in a pounds 3bn windfall. Interest rates are cut by 0.25 per cent to 6.25 per cent.

UniChem makes an "agreed" pounds 548m offer for the Lloyds Chemists chain. But a year later the deal will not have reached a conclusion.

Forte concedes defeat in its pounds 3.8bn battle against Granada in spite of a "scorched earth" defence. Sir Rocco Forte bows out with the pledge: "I'll be back."

Hanson, the archetypal conglomerate, announces plans to break itself up into four companies. It is a trend others will follow.


The end of a "fat cat". British Gas says its unpopular chief executive, Cedric Brown, will retire in May - a year early. The blow is softened by an annual pension of pounds 247,000 and a one-year pounds 120,000 consultancy deal. Mr Brown, who was lambasted as the ultimate "fat cat" after a 75 per cent pay rise in 1994, denies he was pushed out by the British Gas chairman, Richard Giordano.

Mr Giordano, an American, angers "Sid", the group's army of small investors, saying the utility has too many shareholders. British Gas also reveals plans to split into two. British Gas Energy and TransCo International, the pipeline business, are the new entities.

Gehe of Germany tops UniChem's offer for Lloyds Chemists with a pounds 584m cash bid.

MAI merges with the Express newspapers group United News & Media in a pounds 3bn deal.

Ratcatcher Rentokil launches a pounds 1.8bn bid for the business services group BET.

Thorn-EMI announces plans to separate its Thorn rentals business from the EMI music label.


The prospect of economic recovery gathers pace with sharp increases in house prices, followed by the third cut in interest rates in four months. Base rates are cut by another 0.25 per cent to 6 per cent. But shoppers and estate agents stay cautious as the feel-good factor remains elusive. Later, a resurgence of the BSE scare on beef flares up, hitting shares in meat groups. Supermarkets are affected too as the public spurns beef.

BP and Mobil merge their European downstream businesses in a $5bn deal that means 3,000 job losses.

Former Stock Exchange chief executive Michael Lawrence agrees a pounds 500,000 compensation package.

Kvaerner, the Norwegian engineering group, pays pounds 904m for Trafalgar House.

Two Swiss drugs companies, Ciba-Geigy and Sandoz, announce a pounds 40bn merger to create a new behemoth, Novartis.

The SFA clears Peter Baring and Andrew Tuckey of responsibility for the collapse of Barings Bank. But it seeks assurances from them regarding their intentions to re-enter the investment industry.

Bass is said to be in talks to buy Allied Domecq's share in Carlsberg- Tetley and Lord Sterling shakes up P&O, including plans to float Bovis Homes.

Chelsea becomes the sixth football club to gain a stock market listing when Chelsea Village goes public.


The biggest merger deal in UK corporate history is in prospect with news that BT and Cable & Wireless are in discussions about combining their operations. However, neither side can apparently agree on anything, including price.

The housing market gets a much-needed boost when Nationwide, Britain's second-biggest building society, cuts its main mortgage rate by 0.25 percentage points to 6.74 per cent, the lowest since 1965. It sets off a wave of cuts by other societies and banks.

Some 1.4 million members of National & Provincial vote on its pounds 1.35bn takeover by Abbey National. The deal is approved.

The Woolwich drops a bombshell with the sacking of Peter Robinson, its pounds 300,000-a-year chief executive, amid allegations that he had misused society resources. Mr Robinson accuses Woolwich directors of plotting against him.

Electricity takeover activity continues unabated with the shock news that the Southern Company of the US is seeking to buy National Power. At the same time National Power eyes up Southern Electric of the UK and PowerGen approaches Midlands Electricity.

Rover faces a shock of a different kind when its owner, BMW, transforms a pounds 91m profit reported for 1995 into a pounds 148m loss. The company blames the Germans' "conservative" accounting policies.


The gas industry regulator, Clare Spottiswoode, sparks outrage with her package of price controls for British Gas's pipeline business. They will cut domestic bills by an average of pounds 30, but threaten pounds 650m of British Gas's revenues.

Hundreds of famous-name high street shops and thousands of jobs are at risk as the Facia empire built up by entrepreneur Stephen Hinchcliffe crumbles. Mr Hinchcliffe faces legal action by the DTI and possible disqualification as a company director.

Peter Baring appears before MPs to deny charges of incompetence over the pounds 900m lost in the Nick Leeson affair. He tells them: "I do not think we were greedy, stupid or idle."

The flotation of Railtrack chugs out of the sidings, despite Labour attempts at a derailment.

Ian Lang, president of the Board of Trade, blocks the bid for National Power by the US Southern Company and any bid for PowerGen by pledging to retain his "golden share" in the companies.

Midlands Electricity goes under the hammer to an agreed joint bid by another two US utility groups, Cinergy and GPU.

The insurance industry is rocked by the pounds 6bn merger of Royal and Sun Alliance.

BT pulls the plug on merger talks with Cable & Wireless.


Just as the economy shows signs of stronger growth, the Chancellor, Kenneth Clarke, unexpectedly decides to cut interest rates. It emerges that the cut, of 0.25 per cent to 5.75 per cent, was against the advice of the Bank of England. The markets take the news badly. Mortgage lenders take no action.

Another trading scandal hits the City as the Japanese Sumitomo Corporation reveals$1.8bn losses run up by its top copper dealer, Yasuo Hamanaka, who is known as "Mr Five Per Cent." The reputation of the London Metal Exchange is hit.

The nuclear industry is prepared for sale as the Government puts a preliminary price of pounds 2bn on British Energy. It proves much too optimistic.

Oftel, the telephones watchdog, plans tough new powers to curb anti- competitive behaviour by BT.

W H Smith pulls out of its disastrous Do It All DIY joint venture with Boots. Selling its 50 per cent stake to its partner costs Smith's pounds 64m. The following day the new chief executive, Bill Cockburn, announces a restructuring costing pounds 285m.

Shares in Wickes, the third- biggest DIY chain, are suspended as details emerge of accounting irregularities. Henry Sweetbaum, the pounds 1.2m-a-year boss, resigns, along with the finance director.


There are further signs that the economy is starting to simmer. A report forecasts a 10 per cent rise in house prices. Recovery on the high street starts to trickle down to industry and Mr Clarke and Mr George continue to disagree about the right direction for interest rates.

All this gives the stock market the jitters and when a surge in payroll figures in the US confirms their nascent boom, Wall Street suffers the first of a series of violent gyrations. Back home, the new issues market catches a cold, with British Energy falling 10 per cent in first dealings.

Takeover activity remains buoyant, with Whitbread snapping up Cafe Rouge chain Pelican for pounds 133m and Hays making a tilt at Salvesen. The bids that never were include Guinness running its slide rule over GrandMet and the aborted merger of Psion and Amstrad.

Despite the strength of the economy, many people feel no safer in their jobs, and for good reason. ICI says it is laying off 2,700; Rolls-Royce puts the famous old engineering name of Parsons on the block, threatening more than 2,000 jobs; C&J Clark, the shoe maker, makes 1,400 redundant; and the Stock Exchange lets 400 go.


The silly season becomes the month of the row. Stagecoach causes a rumpus by paying pounds 825m for the rolling stock company Porterbrook, pounds 300m more than management had shelled out when they bought the business from the taxpayer in . George Simpson has a disagreement over his pounds 10m pay package as successor to Lord Weinstock at GEC.

Tiny Rowland chips in with a tirade against the new regime at Lonrho after the conglomerate announces plans to float its hotels arm. In the end, the plan is dropped after the company fails to drum up enough institutional support for the sale and a trade buyer, Stakis, is found instead for the Metropole hotels. Thistle Hotels manages to come to the market, although at a rather lower price than had been hoped.

One row is cleared up - the spat between Eurotherm and its chief executive, Claes Hultman, who was shown the door only to be welcomed back again after institutions demanded the return of a man they credited with turning the business round. Colin "Ned" Kelly, a trader at Liffe, has a row with a female colleague and is fined pounds 500 for abusive language.

High street spending booms, there is a sharp fall in the jobless rate, house prices push up inflation and credit card sales go through the roof.


As the business world returns relaxed and tanned from its summer holidays, September brings more than its fair share of shocks. The biggest comes in the form of a nerdy-looking fund manager from Deutsche Morgan Grenfell called Peter Young, with a penchant for designing rockets and, allegedly, a girl called Sandra. As details emerge of irregularities in his handling of ordinary savers' money, it becomes clear that he has perpetrated one of the biggest financial scandals since Maxwell. Deutsche bails out its troublesome British money manager, freezes Mr Young's assets and finally sacks him. The Serious Fraud Office launches an inquiry.

British fund managers are left seething by a plunge in the share price of Matthew Clark, the cider maker that had set out on a spending spree to buy Taunton and Gaymer's and then taken the eccentric marketing route of cutting its advertising budget. The future of Peter Aikens, the company's chief executive who was paid more than pounds 400,000 to move house, is thrown into doubt.

Thomas the Tank Engine, steams to the market, making a small fortune for Britt Allcroft.


October is another month of Lottery-style windfalls for a lucky few as the FTSE 100 breaks through the 4,000 barrier. About 100 instant millionaires are created when NatWest buys investment banking boutique Hambro Magan. The three founders of pet retailer Pet City make millions in paper profits in a pounds 150m merger with PetsMart of the US, while the creators of Prism Rail are pounds 27m better off thanks to a innovative rights issue.

Elsewhere, carpetbaggers are out in force to try and cash in on Norwich Union's planned pounds 4.5bn flotation. Even late sun-seekers gain an unexpected bonus as the pound reaches its highest level for two years. But the Chancellor, rather against the spirit of the time, moves to close a tax loophole on special dividends and share buybacks.

Takeover activity continues apace. CE Electric of the US launches a hostile pounds 651m offer for Northern Electric, sneaking home amid much acrimony this week, while United News & Media finally lands exhibitions group Blenheim for pounds 529m. The long-awaited consolidation of the cable industry sees Mercury, Nynex CableComms, Videotron and Cell Cablemedia join forces in a pounds 5bn merger.


The last Budget before the election proves to be a sensation, but not because of its contents. Details of the famous red box's contents are leaked to the Daily Mirror, which declines to publish them. After the Chancellor sits down it becomes clear why. One of the most boring Budgets on record sees the basic rate of income tax reduced by 1p to 23p, petrol raised by 3p a litre, a packet of cigarettes go up by 15p and the cost of a bottle of spirits cut by 26p a bottle.

The hoped-for blockbuster deal finally arrives in the shape of a pounds 35bn merger between BT and MCI of the US.

In Germany, the pounds 8bn Deutsche Telekom flotation is five times oversubscribed.

Volkswagen sacrifices its production chief, Jose Ignacio Lopez, as the long-running industrial espionage row with General Motors rumbles on.

Shares in Eurotunnel fall after a fire in the Channel Tunnel halts rail services between Britain and France.


Football comes home to the City in December as barely a day goes by without a club announcing plans to seek a stock market flotation. The starting gun for the stampede is fired after it emerges that the satellite broadcaster BSkyB has started informal talks with top clubs about the early introduction of pay-per-view television.

The prospect of substantially enhanced television income also sends the value of football clubs such as Manchester United and Tottenham Hotspur, which are already quoted on the Stock Exchange, to new heights.

Also reaching for the skies are Boeing and McDonnell as the two US aircraft makers announce a $45bn merger that puts the skids under their European rival, Airbus Industrie.

There is drama right up until Christmas Eve in the takeover of Northern Electric by CE Electric, with the US suitor snatching victory by the narrowest of margins after the bid deadline is unexpectedly extended. Elsewhere, three contested bids remain outstanding in the engineering sector alone as the future of Newman Tonks, William Cook and Burnfield hang in the balance.


Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Esteban Cambiasso makes it 3-3
premier league
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
people'I hated him during those times'
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
Dame Vivienne Westwood has been raging pretty much all of her life
peopleFirst memoir extracts show she 'felt pressured' into going out with the Sex Pistols manager
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late
Lewis Hamilton in action during the Singapore Grand Prix
Formula OneNico Rosberg retires after 14 laps
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam