Michael Harrison's Outlook: The Standard has been lowered, but it's still worthwhile getting a Life

Goldman's fires off a cannonball; Mathewson's misjudgement; The beerage makes its return
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The Independent Online

Sandy Crombie likens the Standard Life flotation to a juggernaut which cannot be stopped. Mr Crombie also knows that if you try standing in front of a juggernaut, you are liable to get crushed under its wheels, which would almost certainly be his fate as chief executive if he attempted to abandon the demutualisation now.

There is no reason why he should, notwithstanding the 10 per cent fall in the stock market since Standard decided to take the plunge. Nor is there any reason why policyholders should do anything other than stay on board for the ride.

The issue will be priced to go, as likely as not at the very bottom end of the new 210p to 270p price range announced yesterday. At that level Standard Life will be trading at a discount to its embedded value, which makes the shares a no-brainer. For existing policyholders, there is the added kicker of being allowed to subscribe for new shares at a 5 per cent discount and the one-for-20 bonus share they will collect after a year. It is almost like the good old days when privatisation issues were there to be stagged.

The tracker funds will be forced to buy, which more or less guarantees that Standard will get off to a decent start in its new stock market incarnation and there should be more upside than that. Some 400,000 of Standard's 2.4 million members have so far been too lazy or forgetful to apply for their free shares and, if it stays that way for 10 years, then the money will be reinvested for the good of the company - which will mean its shareholders.

Whether Standard will survive that long as an independent company is another matter. Resolution Life, for one, is known to have looked at bidding privately for Standard before the board opted instead for a flotation and the heavy turnover in shares in the first few weeks after dealings begin will provide any would-be predator with the opportunity to build a stake. The stock markets may be experiencing a bumpy ride, but this is still one juggernaut worth jumping aboard.

Goldman's fires off a cannonball

Sophisticated tactical strike or act of blind panic? No one was more surprised at Goldman Sachs's decision yesterday to raise its bid for Associated British Ports for the second time in 24 hours than the board of the company itself. Remember, no one else has yet put a firm offer on the table, so the Goldman consortium is bidding against itself, which is an unusual tactic in any takeover battle.

Chris Clark, the ABP chairman, had spent months dragging the Goldman's consortium up to 810p, in increments of a few pence. And then, bang, it goes up by 30p in one move as soon as the rival Macquarie/3i consortium hoves into view.

The opposition have made a lot of noise but not actually put a firm bid to ABP. Indeed, it remains far from clear whether the Macbank/3i consortium is fully formed, much less fully financed.

But if he wished to deliver a statement of intent, the head of Goldman's London corporate finance operation, Simon Dingemans, could not have been more emphatic. Listen to the Goldman consortium, and this is more than a shot across the bows of Macquarie and Co, it is an attempt to blow them out of the water before they can get enough momentum up to lodge a formal bid.

Listen to some other people, and it is an act of desperation from an investment bank determined finally to land a deal, having been frustrated in its tilts at ITV, Mitchells & Butlers and BAA.

The truth probably lies somewhere in between but it has created an interesting tactical stand-off. With ABP shares trading at 871.5p - way above the one firm offer on the table - Goldman's is powerless to add to its 5 per cent stake in the company unless it decides to bid against itself again and raise the offer price once more. Macquarie, 3i and their other Canadian and Australian backers, meanwhile, have until the middle of next week to convince the ABP board that they are serious about making an offer and have the firepower to finance it.

Any counterbid would have to come in at 850p, the price at which Macquarie & Co were said to be buying in the market yesterday. Add to that the 8p-a-share break-fee that they would have to pay and the cost of the bid rises to nearly 860p. At that price and beyond, ABP would sell on a higher valuation than even P&O commanded, and it was being fought over by two state-owned strategic buyers with bottomless pockets. We would, then, be in truly uncharted waters.

Does ABP's chairman like having his tummy tickled? You bet he does. Is Goldman's London-based rainmaker determined not to miss out again? You bet he is. Some of Goldman's competitors have jokingly taken to referring to any takeover pitched at a crazy price as a "Dingeman" after the bank offered more money than Ferrovial for BAA and yet still lost out. He may yet have the last laugh.

Mathewson's misjudgement

There are some speeches which should never have been made: Neville Chamberlain's just after he returned from seeing Herr Hitler springs to mind. So does Gerald Ratner's to the Institute of Directors and Neil Kinnock's to that Labour rally in Sheffield. Sir George Mathewson's address at Wednesday night's Decade of Excellence awards organised by Financial News is in the same category.

As the former chairman of Royal Bank of Scotland, Sir George has a good story to tell - how it was transformed from a small and moribund regional bank into one of the world's biggest and most respected financial institutions under his leadership.

Unfortunately, he let temptation, or perhaps it was vanity, get the better of him. Instead of a celebration, his speech turned into a rant - against the previous management, against dozy institutional investors, against lazy banking analysts, against an ungrateful financial press. The only person to emerge unscathed was his protégé and successor, Sir Fred "the Shred" Goodwin.

The 500 guests assembled under the giant marquee in the heart of the City must have wondered why this rude interloper had been invited into their midst until they pinched themselves and remembered he is still an adviser to the RBS board.

The speech was ungracious and unnecessary, which is bad enough. But worse than that it was unfunny, which is unacceptable. Its saving grace, unlike Gerald Ratner's observations about prawn sandwiches and crystal decanters, is that it was also wholly unmemorable.

The next time Sir George is tempted to vent his spleen, he should hire a better speech writer. Or stay home in Perthshire.

The beerage makes its return

Another day and another regional brewer is swallowed up. Hardys & Hansons is Greene King's tenth acquisition but the real ale brigade aren't drinking to it because it will mean the closure of another local brewery. H&H ale has been brewed in Nottingham for centuries and its pub Ye Olde Trip to Jerusalem is reputedly built on the site of the watering hole where knights heading for the crusades gathered. Greene King is on a different crusade. Its market value passed through £1bn yesterday and it is firmly ensconced among Britain's top five brewers and pub owners. The new beerage?

m.harrison@independent.co.uk

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