Outlook: Barclays' calculated gamble may be media steal of decade

Emission curbs; Alpine debate
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The Independent Online

There was much gnashing of teeth, reaching for lawyers and general lack of good grace among other potential bidders for the Telegraph Group yesterday, not to mention outside shareholders in Hollinger International, some of whom feel equally aggrieved, but on the face of it, there is little any of them can do about the Barclay brothers' sensational swoop on the company.

By negotiating directly with Conrad Black, and buying his controlling interest in the company outright without regard for the due process auction being conducted by Lazard Brothers for key Hollinger assets, the Barclays have played a blinder and quite possibly walked off with one of the more remarkable media steals of recent times.

The deal carries substantial risk, which explains why only players as gutsy and self-reliant as the Barclays could pull it off. Lord Black's own board has in effect accused him of having his fingers in the till, so there's no knowing what other nasties lie hidden within his private holding companies. None the less, the brothers have done the deal on trust, without due diligence. Few others would have taken such a gamble. Lord Black's affairs, including his stake in Hollinger International, may be engulfed in litigation for years to come. The Barclays must bear some of the risk of that too, as well as the remote possibility that the Competition Commission will disallow the takeover altogether.

The Hollinger board say that Lord Black was bound by an agreement not to sell his controlling stake in the company without prior approval, but I cannot for the life of me see how such an agreement, which is in any case disputed, could be legally enforced. The shares were his and his alone to sell. If he's sold the company out on the cheap so as to ensure the Daily Telegraph ends up with proprietors he thinks worthy of the title, then that's his affair.

Miserable and depressed though Lord Black must feel, it will give him some pleasure to think that in his final act of involvement with his newspaper empire, he's cheated Tweedy Browne and other shareholder activists out of full realisation of the rich assets that lie within. It seems quite likely that eventually the Barclays, who dislike the disciplines and transparency of publicly quoted companies almost as much as Lord Black, will buy them out and take Hollinger fully private. They can certainly afford it. But in the meantime, all Tweedy Browne can do is sit and stew.

As for Richard Desmond, he continues to brandish his ace - pre-emption rights on a change of control to buy out Hollinger's half share in West Ferry Printers - but it is hard to see how even that could wrench the Barclays' catch away from them. The Telegraph is the biggest contract the printers have and it runs for another five years, which is easily enough time to arrange alternatives should Mr Desmond chose to play dirty.

There's still lots of scope for the Hollinger swoop to go badly wrong for the Barclays, but for the moment they can congratulate themselves on an outstanding business coup. Quite what they'll make of the titles once they've got their feet under the table, either commercially or politically, is another matter.

Emission curbs

Global warming is one of those issues about which something plainly has to be done if our children and their children after them are to live in a half way decent world, yet there doesn't seem to be much point addressing it while everyone else continues to ignore it. Full marks to the British government, then, in going beyond the Kyoto protocol in its proposals to cut greenhouse emissions and impose a 16.3 per cent reduction by 2008.

The new controls will increase costs correspondingly for British industry, driving some parts of it offshore to areas of the world even more polluting than we are now, so there is an argument for saying that not only are we cutting off our nose to spite our face, but we may even be making matters worse.

None the less, someone has to set the pace by example, and there's fat chance of it coming from the US. There may also be an economic argument for going further and faster than others. A European-wide system of tradable emission rights is being established, under which cleaner companies will be able to sell their rights to pollute to less clean ones. Countries with more advanced standards ought eventually to be able to defray the extra costs of cleaner technologies through such sales. There's a less tangible benefit too. Business is best and most effectively conducted in civilised countries. In the modern age, civilisation may come to be as much about ensuring a decent environment as adequate law and order.

Alpine debate

"Partnering for Security and Prosperity", the theme of this year's World Economic Forum annual meeting which gets under way tomorrow in the Alpine resort of Davos, Switzerland, isn't a title likely to set the pulse racing, yet as everyone would agree, there is much to be done on both counts.

The world economy is at last recovering from the after effects of the bubble, but the turnaround is still fragile and uncertain. Public trust in established organisations - political, international and economic - remains low to non existent, and we seem stuck in a world of never ending security alerts, an age of anxiety where the threat to security is as much imagined as real.

Davos can't deliver solutions - that's never been its purpose - but it is a useful barometer of opinion and sentiment in the world's business and political elites, and it often manages to spark some imaginative and lasting multilateral and business initiatives.

That said, the atmosphere at last year's meeting could scarcely have been further from the spirit of reconciliation which is meant to pervade the thin alpine air. With the stock market in meltdown, much of the world in recession, and America about to go to war in Iraq, the mood was one of deep pessimism and visceral anti-Americanism. Some US business leaders left saying they would never attend the event again. Much of the usually sizeable German contingent failed to show up at all. None of this was the fault of the organisers. As ever, Davos was only reflecting the politics of the moment.

Fortunately, things look a lot better this time around. The Germans are back and the Americans haven't carried out their threat. None the less, transatlantic relations remain fraught, and mistrust between Europe and the US is still high. Business and trade cannot flourish in such conditions, which is what makes the resurrection of the Trans Atlantic Business Dialogue (TABD) under the joint chairmanship of Niall Fitzgerald, chairman of Unilever, and Douglas Daft, chairman of Coca-Cola, a very welcome development. The first meeting of the TABD under the new chairmen will take place in Davos this week.

Originally initiated in the early 1990s as a forum for US and European business leaders to discuss meddlesome government, and what to do about it - from tax to regulation and state subsidy - the organisation has in recent years fallen under the influence of policy wonks, and as a consequence become almost wholly irrelevant in furthering the business agenda.

Mr Fitzgerald plans to take it back to its roots, give it fresh impetus and improve its effectiveness. As business, the wealth-producing bit of all economies, sinks under an ever growing mountain of red tape and jurisdictional squabbling, heaven knows this is a much-needed initiative. Most public policy is well meaning enough in its purpose, but it is often enacted without reference to business interest, and sometimes even without knowledge of it.

An impressive list of participating members has been lined up including, from the US, Raymond Gilmartin, chairman of Merck, and Jeff Immelt, chairman of GE, and from Europe, Louis Schweitzer, chairman of Renault, and Josef Ackermann, chief executive of Deutsche Bank. Let's hope they can achieve something.

jeremy.warner@independent.co.uk

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