Jeremy Warner's Outlook: Nasdaq plays some desperate arguments in low-ball bid for London Stock Exchange

Brown's vision of the future for Britain; What now for BA after pensions deal? Jessops: a problem with digital cameras
Click to follow
The Independent Online

If this is the best that Nasdaq's Bob Greifeld can produce in support of his hostile £2.9bn offer for the London Stock Exchange, I am not impressed. Nasdaq applies two circular arguments in attempting to persuade shareholders of the merits of its bid. Neither of them withstand analysis.

One is that the London Stock Exchange faces growing competitive pressures, which will force the exchange to cut fees dramatically to see off the threat of rival markets promised both by the big investment banks and Nasdaq itself if it fails to get its hands on the LSE.

If Mr Greifeld sincerely believed this to be the case, you have to wonder why he's bothering to bid. By acquiring the LSE, he would remove himself as a potential competitor (it should be noted that a previous attempt by Nasdaq to launch in London fell flat on its face), but not the more significant threat of Project Turquoise, the rival platform being planned by big investment banks.

Mr Greifeld's threat to sell his near 29 per cent stake in the LSE should he fail also fails to convince. If what he is trying to say here is that the LSE share price would collapse without the support of his bid, the situation would be doubly bad if he sold his shares at the same time. On his own logic, he'd be lucky to get out without sustaining a very sizeable loss, despite the recent weakness in the dollar. Yet if he expects to get what he paid, then it undermines the argument that the LSE would be worth a lot less without the support of his bid.

Nasdaq is presumably still banking on investors eventually forcing the LSE to agree terms at a slightly higher price. The US exchange cannot go higher of its own volition, for Mr Greifeld has already boxed himself in by declaring the offer final. To raise, he has to have the LSE board's recommendation. Yet at this juncture, the LSE chief executive, Clara Furse, feels under no particular pressure to run up the white flag. That could change as the bid timetable approaches its denouément. Even so, shareholders would be selling themselves short if they obliged her to sue for peace. The LSE is a prize asset. Nasdaq should be made to pay a proper price for it.

Brown's vision of the future for Britain

Gordon Brown, Britain's prime minister in waiting, promised "a new style of government" at the weekend in a wide-ranging TV interview in which he set out his stall for the future. That he sought to distance himself from the disaster of Iraq - even though he is a key part of the Government which got us into this mess - by pledging a foreign policy which would be independent of the United States, won't surprise anyone. Iraq has been Tony Blair's political nemesis. To rebuild Labour's electoral support, Mr Brown has to find a way of putting the past behind him. It is also fair to say that Mr Brown's backing for the Iraq invasion was always less than enthusiastic. His few public statements of support seemed to be said through gritted teeth.

Rather more surprising was his implicit criticism of Mr Blair's "top down approach" to government, or "simply to pull the levers". This sort of centralised government "is not going to be the way to work in the future", he insisted. Really? Well this truly would mark a break with the past, for Mr Brown has in fact done a great deal more than Mr Blair to impose centralised government on the nation.

Because of its control over tax and spend, the Treasury has always been a mighty powerful department, yet under Mr Brown's chancellorship it has reached new heights of authoritarian practice and behaviour. It has been pulling the levers all over the shop. The Department for Work and Pensions, the DTI and the Department of Health are all now essentially run by the Treasury.

The curiosity of Mr Brown's position, where as a Scot he can impose his will on England but not on his own constituents, I'll save for another column. The bottom line is that outside foreign and security policy, the Treasury's power has never been more absolute. It has also become highly politicised, to the extent that the Treasury is now transparently used as a tool of party politics.

Any notion of an independent Civil Service has disappeared, with facts and figures cynically manipulated to suit the Government's purpose. Across the board of government, very little is now allowed to happen without the Treasury's specific say so, for which read that of Mr Brown.

Policy initiatives are routinely vetoed or imposed. Meanwhile, the Treasury's number crunchers are shamelessly deployed to rubbish the Opposition's proposals. Mr Brown promises a new settlement between parliament, government and the electorate, "a new kind of politics in this country ... a new style of government in the future". Is it credible for a politician as unfailingly convinced of the merits of his own ideas and approach to policy as Mr Brown to be saying: "You have got to listen, and then you have got to be prepared to talk, consult and debate"?

As it happens, Mr Brown sometimes appears quite good at listening, talking and consulting. He also "gets it" about globalisation in a manner that few other political leaders in the Western world really do. Intellectually, he understands these trends as well as any. But having listened and consulted, he then goes off and does precisely what he likes.

The last pre-Budget report was a case in point. He'd listened at length to the well-founded concerns of business leaders about the rising burden of business tax and red tape. Yet instead of setting out a road map for lowering taxes he imposed some more.

Miraculously, the British economy keeps growing despite the rising tax burden. Part of this is down to the way Mr Brown has locked in economic stability through some well-judged policy initiatives. Whether that's the whole story is another matter.

Britain has ridden the globalisation wave better than any other major European economy. That success is particularly notable in the City, whose explosive growth has had a galvanising influence on the rest of the economy. Yet this achievement, building on Britain's historic and cultural traditions, has happened despite the Government, not because of it. Can old dogs learn new tricks? Mr Brown invites us to believe he can. I guess we'll know soon enough.

What now for BA after pensions deal?

The deal that Willie Walsh, chief executive of British Airways, has managed to strike with unions to patch up the company's £2.1bn pension-fund deficit lifts a cloud from the airline which ought at long last to enable BA to start behaving like a proper company again. As our news analysis (facing page) explains, the pensions settlement raises the prospect of improved credit ratings, which in turn should allow the company to move ahead with fleet replacement orders and even a return to the dividend lists.

Yet I've always been a little puzzled by the notion that it might also make the company more of a takeover target. Airlines are governed by strict ownership rules. International landing rights, moreover, are allocated on a flag carrier basis. Until these conventions change, there can be no credible takeover bid, or merger proposal, from a foreign airline.

As for private equity, there is no reason why the pensions settlement should make BA any more attractive. Despite the deal, the ultimate bill for pension liabilities is still unknowable. The pensions regulator would also almost certainly demand an even bigger pension top-up from any highly leveraged buyer. For the time being, BA must continue to fly solo. Pensions may no longer be an issue, but there's still turbulence aplenty ahead, not least the response to climate change.

Jessops: a problem with digital cameras

Is the sales collapse reported yesterday by Jessops, the photographic retailer, a structural issue caused by heavy online competition, or is it, as the chief executive, Chris Langley, insists, all the fault of Canon and Nikon in being unable to cater for heavy demand for the latest ranges of digital SLR cameras? The answer may come as early as next week, when DSG International delivers its trading update. DSG is much more than cameras, but it will be better positioned than any to know whether this is a manufacturing or retailing cock-up.