COMMENT : Why French bird in the hand is hard to reject

"Cleaning out the stables is only half the battle. Finding a way forward is the other half"

For Stuart Wallis, chief executive of Fisons, there was always a danger that the long-rumoured bid would emerge before he managed to establish the company with a credible strategy for the future. So it has proved with the hostile pounds 1.7bn offer from Rhone-Poulenc Rorer. When Mr Wallis took over a year ago, Fisons was a company for which it was hard to see a place in the fast-changing world of pharmaceuticals. Too small to justify its substantial and largely undirected research and development facility, it was also too large for the role of niche player. Financially, moreover, the company was slipping into the sea.

The first part of Mr Wallis's brief, to turn the company round and clean it up, is now largely over. Most of the R&D operation and peripheral operations have been sold, production facilities rationalised, and the cost base has been stripped to the bone. With the sale of scientific instruments, the process of transformation will be complete. Already, the achievement is impressive. Even before yesterday's bid, Fisons was one of the year's best-performing shares; the title of "Britain's worst-managed company" with which Fisons was branded a little while back, could hardly seem more inappropriate.

As all chief executives know, however, cleaning out the stables is only half the battle. Finding a way forward is the other half. As things stand, the future continues to look grim.

Patents are expiring, and while the life of some of these products might be extended by the development of enhanced delivery systems, the core business at Fisons is a mature and declining one. Mr Wallis never misses an opportunity to talk about the huge range of opportunities for alliances, link-ups and even full-scale mergers that exist in this industry. However, so far nothing has materialised. Talks with Medeva, one of the most obvious merger candidates and an obvious fit, came to naught. The prospect of finding and cementing the sort of tie-ups that would guarantee a sparkling future within the 60-day timetable of a bid, look remote.

Rhone-Poulenc, moreover, has more reason than most to buy Fisons outright given its existing strength in the respiratory field. The two companies also know each other relatively well through a number of well-established joint venture arrangements. Though Mr Wallis seems intent on fighting to the bitter end, persuading Rhone to up its offer a little may be the better policy. White knights may be hard to come by - three of the most obvious candidates, Astra, Glaxo and Schering-Plough, already have their own competing products either on the market or near to launch. Getting investors to accept his vision of the future may prove equally difficult for Mr Wallis.

Though earnings will rise steeply next year to put an exit multiple of around 16 on the shares - admittedly way below the norm for this sector - this may well mark the high point for Fisons given its declining revenue base. Mr Wallis has developed a good following in the City, but the bird in the hand is always a hard option to reject. In the absence of a white knight, Fisons is going to find it hard to convince investors it is worth much more than Rhone-Poulenc is offering. In France, the fear is that Rhone is overpaying.

A bad week for the private investor

It has not been a good week for the cause of the private investor. The Stock Exchange finally abandoned the rule that obliges a set proportion of all new issues to be reserved for the small shareholder while Crest, the electronic share settlement system to be introduced next year, announced a tariff structure that increases the costs of small transactions.

The effect of both moves is more symbolic than real. The new Crest tariffs make small transactions only marginally more expensive; nor was the Initial Public Offering rule doing much to expand share ownership.

Nonetheless, the impression is of a City that is giving up on the ideal of a share-owning democracy.

To assuage its conscience, the exchange has set up a committee under the City financier, Sir Mark Weinberg, to explore ways of making the private shareholding horse not only come to the water and drink, but keep coming back for more. This is easier said than done, as Sir Mark will tell anyone who cares to listen.

No European country has done more than Britain to trumpet the values of individual share ownership but it doesn't appear to have done any good. Even the privatisation give-aways seem only temporarily to have halted the trend of long-term decline.

Though the number of people holding shares has gone up, the proportion of shares held by private investors has fallen massively. In 1981, 28 per cent of the total value of UK quoted shares was held by individuals. Today, the proportion is down to 18 per cent.

Of those that bought in the privatisations, most took their profits and never returned. It is one thing to be spoon-fed a hyped, sure-bet privatisation stock; quite another to have the confidence to pick one's way through jungles of financial data to bet on a winner. Many people find this daunting, despite the fact that execution-only fees are down to rock bottom.

Instead, the vast majority have taken the easy route of having the choices and the portolio spread decided for them. The explosive growth in unit- linked forms of saving and investment is now the bedrock on which Britain's equity culture is founded. It constitutes a massive public commitment to the equity markets which sets Britain apart from its big continental European partners, and it is a thoroughly modern form of share-owning culture.

There is, however, something unsettling in the thought of an equity environment completely controlled by institutions. Indirect democracy is not the same as the real thing. The recent run of healthily rumbustious AGMs demonstrated that. For this reason above all, Sir Mark's quest deserves every encouragement.

Tomkins' power play backfires in City

When is a share buy-back not a share buyback? When it is announced by Tomkins, the industrial conglomerate, seems to be the answer.

Having announced that it is seeking powers to buy back up to 10 per cent of its shares, Tomkins then went out of its way to explain that it actually has no intention of exercising these powers.

In fact, Tomkins insists, it would not be advantageous to indulge in such an exercise because the money is needed to develop businesses and make acquisitions. Now if the rules were as they are in the United States, where shares can be bought back and kept in Treasury to be issued later if need arises, that would be different.

But they are not; in Britain shares bought back must be cancelled. So if Tomkins has no intention of actually launching a buy-back, why is it seeking powers for one? Just in case, seems to be the answer. Small wonder that dealers are confused.

Start your day with The Independent, sign up for daily news emails
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
Dominique Alderweireld, also known as Dodo de Saumure, is the owner of a string of brothels in Belgium
newsPhilip Sweeney gets the inside track on France's trial of the year
Cumberbatch was speaking on US television when he made the comment (Getty)
Life and Style
Arts and Entertainment
Tom DeLonge, Travis Barker and Mark Hoppus of Blink-182 pictured in 2011.
musicBassist Mark Hoppus and drummer Travis Barker say Tom Delonge is 'disrespectful and ungrateful'
Arts and Entertainment
Olivia Colman and David Tennant star in 'Broadchurch'
tvBroadchurch series 2, episode 4, review - contains spoilers
cyclingDisgraced cycling star says people will soon forgive his actions
Britain's Prince Philip attends a Garden Party at Buckingham Palace in London
Arts and Entertainment
Ed Sheeran will play three sell-out gigs at Wembley Stadium in July
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Lena Dunham posing for an official portrait at Sundance 2015
Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
Bradford City's reward for their memorable win over Chelsea is a trip to face either Sunderland or Fulham (Getty)
Lars Andersen took up archery in his mid thirties
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

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea