The throne looks far from secure for King Des

COMMENT: `Plainly Brian Staples, who was strung up, trussed and dispatched from the chief executive's chair yesterday with a degree of brutality unusual even for the world of high finance, made a profound miscalculation'
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Give Sir Desmond Pitcher enough rope and he will hang you with it. It wasn't that long ago that Brian Staples used to ponder quite openly whether be ought not to be easing King Des off his throne at United Utilities in order to resurrect the group's battered image among investors.

In the end Mr Staples decided that his executive chairman was a much maligned but misunderstood man and should be given the benefit of the doubt. He might be the unacceptable face of privatisation to much of the outside world, but to the good citizens of the North West he was a Messiah. Who can forget Progress with Responsibility, for instance, Sir Des's attempt to distract attention from his bumper dividend policy with pounds 10 money-off vouchers for water customers.

Plainly Mr Staples, who was strung up, trussed and dispatched from the chief executive's chair yesterday by Sir Des with a degree of brutality unusual even for the world of high finance, made a profound miscalculation. Chief execs often leave companies "to pursue other interests" and "by mutual consent" but rarely do they depart in a blaze of public humiliation "following a loss of confidence by the board".

The two camps were not slow in putting forward diametrically opposing explanations of yesterday's shoot-out. Sir Des's followers say he was prevailed on to remove his chief executive after the non-execs said they could not stand him being around a moment longer. The detailed evidence of his failures is less compelling however, seeming to consist mainly of last year's bust-up with the remuneration committee and Mr Staples' failure to inform the board quickly enough of the size of the black hole United Utilities had dug under the streets of Bangkok - a contract incidentally signed long before Mr Staples arrived on the scene.

Supporters of Mr Staples say he had finally come around to the view that the business could not move forward with Sir Des in the co-pilot's seat and was about to make his move when he was outmanoeuvred.

What is indisputable is that no company can have two chief executives. Sooner or later either Sir Des or Mr Staples had to go. Presumably, Kleinwort Benson, the company's advisers ,and NatWest Markets, its corporate brokers, went along with the decision to kick Mr Staples out. Yesterday's stock market reaction rather suggests they picked the wrong man. One thing is certain. Sir Des's throne is still far from secure. The City doesn't like fiefdoms and if that what King Des is establishing, he'll be punished for it.

More evidence of disarray at NatWest

If two of Germany's largest commercial banks can enter into the spirit of the age - the urge in big business to consolidate - why can't NatWest pull it off too? As Bayerische Vereinsbank and Bayerische Hypotheken-und Wechselbank announce merger proposals to create Germany's second largest bank, NatWest is floundering around amid speculation that takeover talks have again collapsed - the second time this has happened for sure in as many months and the third time if you believe the story that Barclays, too, as well as Abbey National and the Prudential, gave NatWest the once over before deciding the whole thing was too difficult to pursue.

No wonder investors are becoming positively angry about the situation. Is there a for sale sign hanging over the bank after recent traumas in the securities division, or isn't there? And if there isn't and directors are merely pursuing their fiduciary duty to examine all serious proposals, why do these talks keep leaking? All seems to confirm the impression of disarray at the top.

Quite why the latest talks collapsed - with the Pru this time - is at this stage unclear. Some put it down to failure to agree on terms, others to failure to agree on the top jobs. Lord Alexander, it is said, is happy to go along with the merger, having been promised the chairmanship. But Derek Wanless, his chief executive at NatWest, is agin, this on the grounds that he would have to make way for Peter Davis as overall chief executive. Whatever the case, there is a tendency in merger talks of this sort for boards to be given a highly impartial and self interested take on whatever is being proposed. What top executives will do to improve the durability of their positions, power and pay never ceases to amaze, and it will often over ride the true interests of the organisation.

There is no suggestion that this is what happened here. All the same, merger talks often break down on less. There was a famous case in the 1960s where talks floundered on the positioning of the new chairman's private loo. So perhaps, if Peter Davis is serious about this, he should just go for it and make an open offer for NatWest. There was a time when the Bank of England would not have tolerated a hostile takeover bid for a UK clearer. But these days, with its supervisory powers being stripped away from it in any case, the Old Lady might be rather more relaxed about it all. Certainly Mr Davis could count on support in the City.

One thing that will hold him back, however, is the possibility of an auction. With consolidation of the European banking industry once more on the agenda, he could easily face a rival offer from Barclays, competition concerns notwithstanding. It is also probably only a matter of time before the first big cross-border banking merger is attempted in Europe. Either way NatWest's days as an independent bank are probably numbered.

Still a family affair at Littlewoods

Oh to be a fly on the wall at today's secret meeting between James Ross, the Littlewoods chairman, and the Moores family shareholders which own the entire empire. Officially it is just a routine get-together at which the disparate members of the Moores clan chew the fat on how the business is doing. But this one promises to be different. First, it coincides with the publication of Littlewoods' annual results which are expected to be none too clever. Second, Mr Ross appears to have some explaining to do as to why he chose to ignore a pounds 540m offer for the entire high street stores business and flog the best bits to M&S instead.

As usual with this company, nothing is quite what it seems. The highly critical "note to shareholders" issued to family members last week, was said to have come from a group of disgruntled shareholders miffed at being kept in the dark about this rival offer. The group's representatives claim that a "growing number of larger shareholders are increasingly agitated about this issue."

Unfortunately, we are not told who they are. Littlewoods doubts that it came from the family at all, suspecting instead that it came from the spurned rival consortium. In fact, says Littlewoods, the pounds 540m offer was really only worth pounds 440m after hefty provisions and payments for an equity stake were taken into account.

Mr Ross may or may not have the family on-side but the shenanigans of the past few days illustrate the awkward position he finds himself in. In a normal company, the board has the mandate to run the business. At Littlewoods, the chief executive is regarded more as a gamekeeper, looking after the family estate. His right to manage as he sees fit is always always open to challenge.

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