City: City takes its sweet revenge on Sugar

WE ARE about to witness something of an investment first: the spectacle of a recommended offer being turned down by shareholders. It is hard to imagine a more incredible end to a takeover. Institutions and private shareholders alike are flying in the face of the recommendation of no less a name than Kleinwort Benson, by sticking two fingers up at Alan Sugar's 30p-a-share bid to take his Amstrad consumer electronics group private once more. That's despite the fact that, in the absence of Mr Sugar's offer, it is highly unlikely the shares will trade at anywhere near 30p for many years to come. In essence, shareholders have decided to look a gift horse in the mouth.

Why? For many institutions, the official justification goes something like this. Mr Sugar, who knows Amstrad better than anyone, is not the altruistic type, and if he is offering 30p a share, the company must be worth a lot more. As far as it goes, it's a fair enough argument. Lord knows, both he and his advisers have offered little enough in the way of information for shareholders to make an informed decision. The problem is that you cannot force someone to work for you. Mr Sugar will almost certainly start to look for ways of bailing out of Amstrad if his bid fails. This is especially the case if the institutions force him to accept non-executives, as they insist they will, to look after their interests. Mr Sugar wouldn't be able to live with such constraints. Amstrad is Alan Sugar - it is based on his ideas, his suppliers and his customers. Without him, the company would quickly become worthless. Mr Sugar's service contract, once of five years' duration, expired in June (was this deliberate?) and there's nothing to stop him leaving. He still owns a substantial share stake in Amstrad, but he could no doubt find a way of realising his investment in a way which would leave other shareholders out in the cold.

Most institutions know this, yet still they are determined to reject his bid. In truth, the real motive for shunning Mr Sugar has little to do with the finer points of investment judgement; it's revenge, pure and simple. Mr Sugar has treated the City with contempt (he's stuffed the institutions with shares at hugely inflated prices) and now the City is going to get its own back, even if that means taking a thumping great loss. That's not perhaps the most responsible attitude for an institution in a position of fiduciary duty to take, but it sure feels good. If there's any lesson at all in this shabby little episode, it is this: never invest in one-man bands; the ride may be fun, but one way or another they'll always end up legging you over.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece