Business View: For the sake of independence, go for a takeover, Caz

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The Independent Online

Trophy assets ain't what they used to be. Football clubs have a habit of going bust on you. After Conrad Black and Robert Maxwell, the cache of newspapers is diminishing. And City institutions can't command those premium prices any more.

Trophy assets ain't what they used to be. Football clubs have a habit of going bust on you. After Conrad Black and Robert Maxwell, the cache of newspapers is diminishing. And City institutions can't command those premium prices any more.

Cazenove is starting to look like a trophy with the silver rubbing off. The blue-blooded stockbroker's reverse auction is now in its ninth month, with no conclusion. Caz was going to float with a value of up to £2bn, then it was going to float with a value of over £1bn, then it was apparently up for grabs with a price tag of about £1.1bn. That was in January. Since then, the supposed suitors have been Lehman Brothers, Morgan Stanley, Barclays, JP Morgan Chase and Lehman again. Now it seems Caz has two offers on the table, and should decide by the end of the month.

JP Morgan wants to set up a joint venture into which Caz will put its 800 equities traders, research analysts and corporate financiers, while Morgan donates 50 staff and all the capital. This will allow Caz to hand its £250m of capital to shareholders (who are mostly its employees), and Morgan will give another £100m or so to add to the bonanza. The argument for this is that Caz's independence will be maintained. The argument against is that it is an untried and potentially fragile structure, and that when Chase merged with Morgan, it was the venerable Morgan whose culture took a beating.

The other plan comes from Lehman. It is a takeover, with the Yanks paying £500m up- front and another £300m depending on performance. Caz loses its independence but its staff get the money they have been holding out for and then join Lehman, which is a firm on the up and hardly has a reputation as a poor payer.

The big plus point of this deal is the relative size of the firms. Lehman may be 15 or 20 times bigger than Caz, but in Europe the ratio is more like two to one. Caz will be a big fish in the Lehman pond but a flea's bite for the £80bn goliath that is Morgan.

Must try harder...

If any of you were students of John Vickers when he was a professor of political economy at Oxford, may I suggest you obtain a copy of the letter he sent to Trade Secretary Patricia Hewitt on Thursday. In it, the Director of Fair Trading failed to answer any of the accusations of inaccuracies laid against his office's report into auditor liability caps. He merely said he would stand by his conclusions that the caps would not help competition.

On that basis, any student should ask for his or her essays to be remarked. Any mistakes in the research can be glossed over. Indeed, maybe the students should start with the conclusion and chuck in whatever (unchecked) facts fit in with the story.

Exasperated accountants will see Ms Hewitt tomorrow in a last-ditch attempt to persuade her of the good sense behind liability caps. They will point out that Mr Vickers and his crew were wrong to say that the big firms can get insurance. Maybe Nick Land from Ernst & Young might point to the looming Equitable Life case against his firm, where the £2.5bn claim could put E&Y out of business.

Time is running out. For the Government to bring in liability caps, it would need to back an amendment to the Companies Bill, which goes before Parliament on Tuesday. That's a fact, Mr Vickers. You don't need to check it.

Sir Alastair's wee tale

The passing of Sir Alastair Morton leaves the business world with one less genuine character. People called him abrasive, but his objective was to get things done - which with the Channel Tunnel he did. The collateral damage he caused was incidental.

I have two favourite stories about Sir Alastair. One involved him taking a colleague to the Press Complaints Commission over an article he objected to. The PCC found against Sir Alastair because he was the source of the story.

The other goes back to his days running merchant bank Guinness Peat. He wanted to force out the then chairman, the diminutive powerhouse Lord Kissin. So he had the executive toilets refurbished and raised the urinals to a height which Lord Kissin would find inconvenient.

Sir Alastair will be missed.

j.nisse@independent.co.uk

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