Growing four arms won't reassure the sceptics

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Honestly. The things you have to do to get noticed these days. After years of wowing the City with the ever more daring and sizeable takeover, it all went wrong for Hanson in the early 1990s when the two Lords who made the group into a 1980s wonder stock decided to take on ICI. Hanson's shares have languished ever since. Not even the pounds 2.5bn acquisition of Eastern Electricity could revive them. Relative to the rest of the stock market they continued to plummet, a deeply ironic turn of events for a company whose whole raison d'etre was shareholder value and making the assets sweat.

In the meantime Hanson has become a byword for the boring old, oversized conglomerate. Lord Hanson has managed to keep himself in the press, but only with a string of personally bylined and increasingly loopy articles on anything that takes his fancy. His columns, an unkind critic might say, are as unfocused as his company. Now he has done something guaranteed to earn a headline or two - a four-way demerger of Hanson which allows him and his son, Robert, to reinvent the old Hanson in one of his parts.

Lord Hanson and his chief executive, Derek Bonham, have been making valiant efforts to streamline Hanson into core business sectors for some years now. Demerger is the logical conclusion, but is it really the right approach? Other acquisitive creations of the 1980s, notably BTR and Williams, have managed to cast off the conglomerate label by transforming themselves into industrial companies, a process which for BTR has involved more than pounds 3bn in disposals. This was always going to be more difficult for Hanson, which despite a substantial disposal programme - including the prototype demerger of US Industries - remains a group of wholly unrelated businesses.

The more radical demerger now proposed will address that problem at least, creating four companies which individually have some kind of commercial and industrial logic to them. But will it make much difference to shareholder value? Ironically, the inspiration for this demerger was the success of the ICI-Zeneca separation, which was itself in part a response to Hanson's unsuccessful siege of the group. There the justification was that, once freed from one another, the two arms would be able to respond in a more flexible way to changes and opportunities in their respective industries.

Hanson's case for demerger is much the same. A more dramatic change of tack is hard to imagine, for Hanson was famously built on the premise that the nature of the underlying businesses was irrelevant - provided they were run efficiently in the interests of shareholders. With the carnivore now evolved into lumbering herbivore, the life cycle of this particular conglomerate seems finally to be complete. But though Hanson may have lost its way, it is by no means clear that the four offspring are going to fare any better.

Detail of the break-up is thin on the ground at this stage, but it is hard to see why the four quite highly geared successors should collectively be worth any more than the original. Furthermore shareholders lose the advantages of Hanson's centralised Treasury and tax planning functions. In recent years these may have become less important, but Hanson may none the less have some difficulty in convincing investors that their loss, combined with the likely high cost of the demerger exercise, is outweighed by other benefits.

Then there is the suspicion, strongly denied by Hanson, that in part the whole thing might be motivated by Lord Hanson's desire to give his son a decent job. The City was never going to have Robert Hanson as chief executive of the whole shebang, but a small part of the old empire? Well, he may just about get away with that.

All unworthy thoughts, no doubt. Even so, Hanson will have a lot of explaining to do over the months ahead. Quite a number of shareholders have yet to be convinced that a major disposal, say of the tobacco division, might not have been the better approach.

Waiting for the EMU music to stop

As the plan for European monetary union flounders, predictable attempts are being made by Europe's political elite to restore its credibility. Matching their rhetoric with deeds, the French and Germans synchronised the announcement of joint measures yesterday designed to stimulate their economies and so help meet the Maastricht criteria.

That at any rate was the line out of Paris, where the finance minister, Jean Arthuis, announced a package of measures designed to force down the cost of bank lending, which had not fallen in line with the reduction in money market rates.

The mood music from Bonn was very different as the government announced a typically teutonic 50 point plan to tackle Germany's economic woes. There, Theo Waigel, the German Finance Minister insisted that there was no joint initiative on employment. Behind the scenes, German officials have been playing down the ability for a concerted attack on the economic slowdown and jobs crisis that afflict both countries.

As long as policy is dictated by the Maastricht treaty, that is no more than a statement of the obvious. The strenuous attempts which are being made to hit the budget deficit criterion of 3 per cent or less of GDP rule out the use of fiscal policy to counter the slowdown. Instead, monetary policy must take up the baton.

Which leaves France, as ever, dancing to the tune of the German Bundesbank. That often means that moves in interest rates happen virtually simultaneously, but it does not add up to jointly agreed action. All the more reason, argues the French elite, to grasp the nettle of two more years of economic pain, if that means wresting control of monetary policy from the mighty German Bundesbank. A simpler course, argue the dissenters, would be to abandon the franc fort policy which tethers the franc to the German mark.

Given the commitment of the French political elite to the strategic containment of Germany via EMU, British hopes for an early rethink of the project are wishful thinking. But it is far from clear that the easing in monetary conditions in the past few months in France and Germany will be sufficient to reverse the economic slide.

What could make the difference is a substantial depreciation of an over- valued German mark against the dollar. The mark has been falling, but on nothing like the same scale as the yen. It's a case of Catch 22 all over again; as long as the markets suspect EMU is a busted flush, the German mark will retain its appeal to investors.

Economic co-ordination, whether in Europe or in the Group of Seven countries, isn't a bad idea. But this latest Franco-German attempt to choreograph economic announcements won't calm the nerves of the markets.

That key audience will continue to ask what will happen if and when the EMU music stops. The orchestra cannot go on playing for ever, particularly when the music is so discordant.

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