Business View: These damp squib bids don't set me alight

The offer for ITV isn't the only one to promise more than it delivers
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The Independent Online

It's been a long, slow, miserable half-dozen years for M&A dealmakers. Since the dot-com boom subsided in early 2001, and the entire financial community took flight after the 11 September attacks, big takeovers have been thin on the ground. There have been restructurings - a lucrative job but only for specialists - and private equity bids - but those financial buyers know how to chisel down the fees and rarely go aggressive. What you want if you are in mergers and acquisitions are big, hairy, hostile bids.

But bids aren't what they used to be. Last week should have been a bonanza for the deal-makers. Aviva - the insurer created by crunching together Commercial Union, General Accident and Norwich Union - went after its biggest rival, the mighty Prudential. Meanwhile, a consortium of venture capitalists took a tilt at ITV. And if you add into the mix the prospect of a Russian bid for Corus, that's three FTSE 100 companies in play. If you are greedy - and these M&A guys are, believe me - you have Ferrovial and chums attempting to secure BAA, and Dubai Ports World walking off with P&O (even if it has to leave its US business behind).

However, all this is a bit of a mirage. Aviva's tilt at the Pru fell apart like a flat-pack wardrobe; Ferrovial is way off the money; I'll believe a bid for Corus when I see one; and as for the ITV offer - do me a favour.

The Apax-Blackstone-Goldman Sachs approach has a lot of things going for it. The three backers all have lots of dough. Their putative new chief executive, Greg Dyke, has lots of experience. And, supposedly they have the support of ITV's largest shareholder, with 17 per cent, Fidelity. The normally taciturn fund manager has been completely schtum with the media on this, so no one can be really sure. All that is certain is that Fidelity is not happy about ITV's share price and wants something done, and that it has a meeting with Charles Allen and the ITV top brass this week.

At that meeting, Mr Allen will argue that he can deliver more cash to shareholders if he is running the company than Greg Dyke and his venturers. How come?

1: Before a penny is delivered to the old shareholders, the Apax crew will cream off up to £200m in fees. That's close on a 4 per cent commission, which is a good return in anyone's world.

2: If you were hosting a dinner party or making quality TV programmes, Mr Dyke would be ahead of Mr Allen on your wish list. But if you want a company run for cash, go to Charlie. Greg at the BBC might have axed free croissants and pricey consultants, but he also oversaw a massive increase in the BBC's headcount that his successor, Mark Thompson, is wrestling to control.

Mr Allen's problem is twofold - he is not particularly popular, and his track record at ITV is not that great. He will offer more cost cuts and up to £1.5bn in cash by leveraging the future revenues from ITV1. But will this be enough?

Unless the Apax team can come up with something better, yes. Last year's failed tilt at Rentokil by Mr Allen's former boss, Sir Gerry Robinson, might indicate investors do not like the stub equity model advocated in this offer. But looking slightly further back, a similarly structured deal led to the takeover of Canary Wharf. It all depends on what is in the locker.

Apax has been trying to get an ITV bid off the ground for over a year. If this is its best shot, I'd be rather surprised.

Tucker's luck at the Pru

Norwich City 0, Chelsea 1 was the reaction to the end of Aviva's brief attempt to buy the Pru. Mark Tucker, the Shed ender, was gearing up for his John Terry-like defence when he found there was nothing to defend.

Aviva really looks a chump. But not as much a chump as its advisers. A tip. Don't be too ambitious when putting in your bills for fees, boys.

j.nisse@independent.co.uk

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