“National interests in the sphere of strategic-level business have all but disappeared,” claims a senior executive of EADS in a new book. But the opinion of Lutz Bertling, chief executive of the group’s Eurocopter subsidiary, is now being tested in battle, as national governments wrangle over what a merger between EADS and BAE Systems would look like.
To be fair, the German executive’s chapter – “Commercial Top Strategic Leadership: A Helicopter View” – was written before the EADS-BAE talks became public. But the question of how Mr Bertling’s personal views might apply to the aerospace and defence merger was raised at Thursday’s launch of In Business and Battle, a “cross-cultural, cross-sectoral and international” anthology of insights into strategic military and civilian leadership. The discussion at London’s Royal College of Defence Studies – where Mr Bertling first presented his ideas – was non-attributable. But as one of the distinguished guests said: “Consolidation is right, but whether this is the particular merger that should be backed is still open to some debate.”
Next week, the Financial Services Authority is due to announce tighter listing rules to deter abuses by London-listed companies. There is cause for disquiet: this week’s implosion of Bumi , the Indonesian coal-mining group part-owned by Nathaniel Rothschild, the financier, follows governance wrangles at the Kazakh-focused Eurasian Natural Resources Corporation.
The news that Temasek, the Singapore investment fund, may dispose of its £6bn stake in Standard Chartered, has reignited talk of the British bank finally losing its independence. I will believe it when I see it.
No doubt Standard Chartered will cease to exist as an independent bank one day, but I have heard speculation about it for 20 years, and it never quite seems to happen. It is like talk of the dollar losing its status as a reserve currency.
The “fit and proper” test is regulators’ and professional associations’ tool of choice for assessing suitability for office – a spirit-level for acceptable conduct.
The outcry over Apple’s switch on its new operating system and iPhone to its own mapping technology rather than Google Maps strikes me as more serious for the Cupertino wizards than past glitches.
There have been widespread complaints over Siri, the voice-activated artificial intelligence application in the iPhone 4GS and now iPhone 5. But Siri is at least an optional extra, while maps are now a key product feature of smartphones.
The trouble is that Apple is playing catch-up with Google over its mapping technology – it switched to its own information service because it felt that Google was favouring Android phones, leaving the iPhone vulnerable.
It is natural to regards any merger proposed by BAE Systems, the UK’s biggest defence company, with suspicion. Had it a better record of predicting its industry’s future and doing deals at the right price, it would be in less of a pickle.
If I were a 72-year-old billionaire with interests in three Los Angeles sports teams and venues from the Californian city’s Staples Center to London’s O2 Arena, I might be inclined to relax, put my feet up and count on enjoying another 15, even 20, years of guaranteed VIP seating at the best live events in the world. But I am not Philip Anschutz, the Denver-based billionaire who has just put Anschutz Entertainment Group, his sport, music and entertainment company on the block.
We’re unlikely to hear the explanation for this decision direct from the mogul himself. One of the few live events AEG has not had a hand in staging or hosting recently is a press conference or interview starring Philip Anschutz.
Add another episode to the saga of the overworked modern chief executive: Akzo Nobel announced on Tuesday that Ton Büchner, appointed to the Dutch company only in April, will take a “leave of absence” having been “diagnosed with temporary fatigue“.
It is all reminiscent of Lloyds Banking Group’s decision to give António Horta-Osório, the UK company’s chief executive, a rest last November, to get over insomnia and exhaustion. The Portuguese CEO has since recovered – sufficiently to trounce the FT’s banking editor at tennis a couple of months ago.
For BAE Systems and EADS, the European aerospace and defence companies whose courtship was revealed last week, it’s simple. Business logic will help level the political hurdles and bridge the legal pitfalls that lie in the path of their proposed union.
Shareholders in BAE Systems and EADS should know what they’re getting into. The FT’s Alison Smith laid out the governance pitfalls on Friday, and Steven Davidoff has pointed out for the New York Times’ Dealbook that setting up a dual-listed structure requires an “unbelievably complex set of agreements in which [the companies] agree to equalise their shares, run their operations collectively and share equally in profits, losses, dividends and any liquidation”.
But a picture is worth a thousand words, so here are three illustrations of the full horror of some dual-listed structures. Expect EADS-BAE, with the added political and defence ingredients, to be 100 times more complex. Nice work for investment bankers, corporate lawyers and company secretaries; hard work for everyone else.
1. This classic describes the consequences of Reuters’ 2008 merger with Thomson Corporation (from the 545-page prospectus that one investor likened to War and Peace). Easy to see why the Anglo-Canadian DLC ended up abandoning its London listing in 2009:
If regrets, apologies and promises to behave better were redeemable for cash, the world’s banks would be rolling in it.
Social media buzzed around Mark Zuckerberg’s comment on Tuesday that he wrote the “founder’s letter” for Facebook’s initial public offering registration statement on his mobile phone. (Big deal – investors who have suffered since must wish he’d used the phone’s computing capacity to set the offer price at a more reasonable level.)
I was more interested in his admission that the social networking group had “burned two years” betting on the wrong mobile technology. For most companies, that doesn’t sound like a long time to spend exploring a potentially highly profitable dead-end, but remember, Mr Zuckerberg hit the button that launched “Thefacebook.com” on February 4 2004. It has barely been in existence eight years. In that context, to burn two years is like Ford (founded 1903) wasting a quarter of a century developing a five-wheel car or General Electric (1892) blowing 30 years exploring the possibilities of a steam-powered lightbulb.
Antony Jenkins, new chief executive of Barclays, and Rich Ricci, chief executive of corporate and investment banking, have said the right thing. Can they now do the right thing?
The rhetoric of their speeches to analysts on Monday was fine. Mr Jenkins said Barclays would “operate to the highest ethical standards. It will be balanced, less risky and more profitable”. Mr Ricci expanded on this:
We have always scrutinised our businesses based on their ability to generate returns, with careful evaluation of risk and controls embedded in that analysis. Now however, I feel it is appropriate to modify that assessment by explicitly looking at reputational risk as the first hurdle. We have to take a fresh look to see if there are products and services in which, given the changing environment, we no longer deem it appropriate to do business, regardless of financial return.
Asked to choose between government intervention in the delicate business of innovation and government withdrawal from the field, I always used to plump for the latter.