James Moore: Tomkins takeover does not reflect well on institutional wheeler-dealers who want it

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The Independent Online

Outlook So goodbye Tomkins. The metal-basher has become the latest British corporate name to succumb to an overseas takeover bid at a price (325p a share, valuing the company at £2.9bn) that at least one prominent shareholder believes is too cheap by half. Standard Life is not alone in taking the view that Tomkins was far too eager to cave in to the Canadian consortium that will now benefit from a recovery at the group. Several analysts have suggested that a price of as much as 400p would not be unreasonable or unachievable. Most investors chose not to listen.

In conceding defeat, Standard's head of UK equities, David Cummings, expressed hopes that the votewould not be seen as a signal to other potential bidders for UK companies that shareholders were prepared to sell assets too cheaply as a consequence of the current depressed market conditions.

If the behaviour of his colleagues at other investment houses is anything to go by, his hopes are likely to be dashed. Standard Life, which holds 3.17 per cent of Tomkins, provided nearly a third of the votes against the takeover, which was backed by 90 per cent of the shares.

When concerns are voiced about the way overseas businesses can so easily take advantage of market or economic conditions to gobble up the best of corporate Britain on the cheap, it is fashionable to make note of the fact that most British companies aren't very British any more. That is largely because the big British investors of yesteryear, such as pension funds and life insurers, have been forced out of equities as a result of misguided regulation. They have often been replaced by overseas investors, which have little or no interest in the health of UK plc or its stock market, and are only too happy to welcome bidders with open arms if it means a quick profit. The suggestion, from organisations such as the Association of British Insurers, is that were the Government or the regulators to rethink their stance and encourage British investors back into British companies, it would not be so easy for foreign predators to gobble them up on the cheap. That's not to say that they would block all takeovers – and nor should they be expected to. But they would be able to prevent overly cheap, or opportunistic bids for good companies with depressed share prices because of short-term weakness in stocks or the markets or in sterling.

And yet, with the honourable exception of Standard Life, the sort of British investors who might be expected to provide a voting bloc for the long-term view (were the regulations to be reformed to encourage insurers, pension funds and others back into equities) singularly failed to do so in this case. Most of the British institutions voted to accept the offer and cash out.

To be fair, the bid was recommended by Tomkins's directors, both executive (who will largely keep their jobs) and non-executive. But why should that automatically mean that shareholders should back a bid, particularly one that informed City opinion regards as ungenerous at best. As parents say to errant children who blame friends for their misadventures: "If little Kenny said jump off a cliff, would you do so?"

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