Staying power of a utility player

profile; Despite the Clark Kent mien, Sweb's chairman is a tough survivor of takeover dramas. Helen Kay finds him ready for the battle with a US predator
Click to follow
The Independent Online
MAURICE WARREN normally gets more letters and telephone calls in his role as chairman of the Clevedon Golf Club than he does as non- executive head of South Western Electricity. But lately he has been swamped by correspondence from West Country consumers and shareholders furious at the prospect of their local power supplier, familiarly known as Sweb, falling into the hands of US-owned Southern Electric International.

"One actually wrote, 'Keep the Yanks out!' " says Warren, recalling the reaction to the dawn raid which netted SEI an 11.2 per cent stake in Sweb two weeks ago, followed up by a pounds lbn hostile bid. "Our shareholders don't believe a business that serves the South-west should have its headquarters in Atlanta."

A slight man with a soft Somerset burr, he may seem like the typically uninspiring utility boss whose gradual progress up the ladder in a protected local monopoly has been overtaken by unexpected and undeserved wealth and influence after privatisation. But Warren, former chief executive of the international food group Dalgety, learnt his skills in businesses which face real competition - and he has survived a takeover or two in his time. "He's tougher than he looks," says someone who knows him well.

Whether Sweb will survive Southern's bid remains to be seen. Few City analysts believe it will. But, if Warren has his way, the Americans will pay over the odds to come over here. He has spent much of the past week in his war room on the seventh floor of Schroder's City office and, although he is not yet ready to unveil details of the defence plan being prepared, he insists it will be a "knock-out" package.

"The tanks are on our lawn," he says. "If we have to be rather more daring than we were, then we will be. We always said we would pass the value of the National Grid on to our shareholders and customers. We'll also look at our balance sheet structure, the possibility of a special dividend, and the dividend delivery over the years ahead, to ensure shareholders understand the real value of the company. I'm confident we'll be able to show it's worth significantly over pounds 10 a share."

Most observers believe Warren can drive Southern up from its opening offer of pounds 9 a share, but doubt whether he can realise much more than pounds 10.

However, Warren clearly intends to man the barricades for some time yet. "Sweb belongs to our shareholders and customers, not SEI's shareholders. It's an opportunistic bid and we'll keep all guns blazing.''

Born in Minehead in 1933, Warren is the son of a cabinet maker- cum-funeral director. "The two things went together. Cabinet makers became funeral directors because they had spare wood to make coffins," he says. But the business collapsed soon after his birth, forcing the family to move to Bristol, where his father was a postman.

His mother died a few years later; when Warren was five. Then his father was called up to fight in the Second World War, leaving his new wife to raise their three children. Warren was evacuated from the city, but on his return, after the heaviest air raids were over, he won a scholarship to a grammar school run by the Christian Brothers. Money was always short, and at 16, he left school and joined a local accountancy firm. "I seemed to be good at numbers, but I couldn't afford the article fees to become a chartered accountant. I trained as a certified accountant instead," he explains.

He continued his studies in the RAF, then returned to his old employer. "I qualified as an accountant in 1955, but left immediately afterwards because they offered me another pound a week - from pounds 4 to pounds 5 - and I thought that was an insult," he smiles.

In 1958, Warren joined Crosfields & Calthrop, an animal feed manufacturer. He rapidly moved up the ladder and, by 1971, was sitting on the board. But in 1974, the company was bought by Dalgety, the white knight which came to Crosfields' rescue during a bitterly contested take-over battle. Warren's survival skills came into play. Dalgety's management put Warren in charge of its agribusiness.

Another hostile bid provided the next boost to his career, when, in 1979, Dalgety acquired Spillers, the food manufacturer. Warren became managing director of the UK arm, and was brought down to London to put the two operations together. So successful did he prove that Dalgety UK eventually contributed the bulk of group earnings.

But in the mid-1980s Dalgety came spectacularly unstuck with the acquisition of Gill & Duffus, an international commodity trader. Finally, in 1989, the then chief executive was asked to leave, and Warren soon took over.

During the next six years he stripped back the sprawling Dalgety empire, selling off its operations in Australia and Zimbabwe, together with most of those in the US and Canada, to focus on the development of the European food and agriculture business. It was, he admits, a difficult time. Given Dalgety's long history as a London holding company with its roots in the Australasian farming industry, there was considerable resentment at this slewing of the group away from its roots.

By 1993 Warren had brought Dalgety back on course. But, at 60, he was tiring of the rat race. "I'd been going flat out through the Eighties," he says. He also wanted to see more of his wife, who had kept the home fires burning in Clevedon, near Bristol. "My greatest achievement is probably being married for over 40 years. We also have a son and daughter, and five grandchildren. We're a very close family."

In fact, he ended up staying on as Dalgety's non-executive chairman. That year he also became non-executive chairman of Sweb. The job appealed to him as a passionate West Country man, but "if you look at the sort of business I've been involved in, they're all essential products". But he is quick to point out that the electricity business is unlike any other. "Southern have talked about how they've examined our company. How can you examine an electricity supply company from the roadside? We bought a lot of companies at Dalgety. We had people observing factories and lorry movements, we looked for waste and so forth, long before we bid for the company. But you simply can't do that with an electricity company. You can see a lot of wires and pylons, but how do you assess it from the outside?"

The West Country apart, however, public sentiment may not be on his side. Last Monday the Greenbury report on directors' pay and perks singled out the utilities for special blame. "The popular image of fat cats is really quite wrong," Warren says, but he concedes that "there are a few outstanding examples of irresponsibility, which have given the industry a bad name". He is shy of naming names, - although, when pressed, he admits disapproval of salaries that have soared by several hundred per cent.

Sweb has not been guilty of such excesses, he insists, although he does not address the fundamental question of what is the right reward for a job in a regulated local monopoly. The annual report for 1995 shows that all but one of the directors earn less than pounds 100,000 a year. Only John Seed, the chief executive, makes significantly more. And, at pounds 177,000 a year, his salary is less than those enjoyed by the bosses of most other regional electricity companies. The same is true of Seed's share options, which are currently worth about pounds 126,600.

The fuss over pay and share options should not detract from the overall achievements of privatisation, Warren argues. He points to the 13 per cent cut in bills and what he says are better standards of service consumers have enjoyed since Sweb went private. Nevertheless, it is clear that he is a realist.

Sweb has no intention of steering either itself or the industry on to the rocks in its efforts to avoid SEI's embrace. "I said to a friend the other day, 'This might be the first job in 40 years that I get fired from'," Warren concludes. "But we haven't failed yet. We'll leave no stone unturned."

Comments