UK Equities: Jottings Update

Saturday, September 18, 2004 | | 0 comments »


Abbey
So Banco Santander looks to be in the frame for an unopposed takeover. As predicted previously this is likely to be better for the UK consumer as choice is safeguarded, as are the employees. Savings required will be less (as no party has overbid) and there won’t be (m)any messy branch closures. So, rejoicing all round except in the City where "Investment" bankers are crying all the way to Corney & Barrow to drown their sorrows (on expenses) at their failure to con all the other proper banks into paying their outrageous fees.

Northern Rock
Silliest story of the week was the announcement from Northern Rock on Monday (13/9/04) that they had appointed Citibank as advisors (not that they were considering bidding for Abbey you understand – they're too small) but because “"t would be imprudent not to have advice at times like this". Citibank clearly saw them coming - to quote W.C. Fields "Never give a sucker an even break"!

Corporate Excess
So Sir Peter Davis is to get his fee, albeit slightly reduced and he does have to "earn" some of it by forfeiting the balance of the next year’s salary should he become re-employed. As we’ve said before it certainly beats working! Still, when asked for a quote it appears Sainsbury’s are pleased to be shot of him… when asked as to why he left they simply said: “He was dismissed!” Toot, toot!

Intercontinental Hotels
Well, well, a boardroom coup. What joy – the value destroyer North has gone. One assumes the management woke up to the fact under North there would soon have been no business left – except for a rather flaky franchise. The thing about hotels is that they are very cyclical – yes sell a few properties at the peak, but keep the cash to buy more (bigger and better on the dips)…and certainly don’t give it back in the form of a share buy back – this is real cash here! By the way, North’s previous record is questionable – he was one of the team (along with the collusion of the fee driven "investment" bankers) who destroyed Bass.

Cazenove / JP Morgan
So it seems that the boys in Blue may finally succumb to some fiendishly complex joint venture with J.P.Morgan. Frankly this ludicrous charade is unseemly and worse, unnecessary. If the franchise is really bust – as some allege – it is certainly not borne out by results. Further, if it really were the case they would have succumbed years ago.

Shell
I see the first suit has arrived on Shell's desk from a group of litigious US lawyers. They allege that they have lost as a result of the "overbooking" of reserves. Eh? Excuse me, we won't know what has been lost for decades or even whether or not these were aggressive or conservative estimates. Butt knowing Shell, I'd plump for the glass half full view. Someone cleverer than me will also be able to establish quite clearly that the Shell share price now is in its normal range vs. its peers even now after the "scandal".

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