‘Tell me we’re winning the media battle!’ I imagine Unilever boss Alan Jope barking at his team on Tuesday, following the revelation on Sunday of his rejected £50 billion bid for GlaxoSmithKline’s consumer healthcare arm.
‘Yes, sir,’ replies the flustered PR, ‘Very much so… except for top investor Richard Buxton of Jupiter telling the FT: “The idea of letting the goons at Unilever run [the GSK business] is laughable.” Then there’s an analyst in the Telegraph saying: “We can’t imagine many things that would unnerve us more about Unilever” than this deal going ahead. Oh, and our shares fell 7 per cent yesterday.’
Jope is now huddled with his advisers trying to work out whether he can up his bid to the £60 billion that might be acceptable to GSK shareholders without crippling his own balance sheet. And if he does so, will the market accept that Unilever —widely seen as a top-heavy conglomerate struggling to extract decent returns from its existing soap-to-ice-cream portfolio — is capable of turning a profit from the acquisition of another big bundle of GSK brands?
In the end, price always trumps logic in the takeover arena. But it’s interesting in a broader context to note the damage done to Unilever’s cause, just before the bid story leaked, by a scathing attack from veteran investor Terry Smith on the company’s ‘obsession’ with sustainability and other fashionable causes.
In mocking Jope’s declaration that every Unilever product should be ‘a brand with a purpose’ and ‘stand for something more important than making your hair shiny… or your food tastier’, Smith has shone a spotlight on billowing clouds of hot air around ‘purpose’ — vaguely meaning outcomes which are worthier than profit or shareholder value — that nowadays obscures so much corporate performance. Jope and his ilk should keep in mind the example of Emmanuel Faber, who announced in June 2020 that the French food products group Danone of which he was chief executive would henceforth be an entreprise à mission or ‘purpose-driven company’ — and was ousted by shareholders nine months later when it became apparent he could not generate returns even to match Unilever’s.
Voice of the market
‘The screen gives you the price but the voice gives you the market,’ was a dictum of Derek Tullett, the doyen of City money brokers who has died aged 87. Tullett & Riley, the firm he founded with 15 staff in 1971, grew into Tullett & Tokyo Liberty, a dominant international player in interbank deposit and foreign exchange dealings. Tullett himself, lifelong Labour supporter and son of a south London fruit salesman, commanded universal respect in the Square Mile. Eddie George, the Bank of England’s market-savvy governor, took his calls; to his head-to-head competitor Michael Spencer of ICAP he was ‘tough as nails but always courteous’.
One market veteran recalls, as a young trader in the 1970s, Tullett’s ‘machine-gun delivery of forward cable’ (dollar-sterling) rates: too fast to write down but no one ever dared ask him to repeat them. ‘We stayed friends for nearly 50 years,’ says my correspondent. The passing of Tullett reminds us that the City was a better place when its authentic voices carried more power than the numbers on its screens.
It’s low politics on the part of the Prime Minister to let culture secretary Nadine Dorries savage the BBC as a tactic to save his own job. But speaking personally, I’d say that the role of the corporation in our social fabric will be defunct long before 2027, when — if there’s still a Tory government — the axe will finally fall on the licence-fee funding model. I’m a late adopter of most technologies, but since lockdown I find I watch no terrestrial television at all and only listen to Radio 4 if Times Radio is out of signal, though I’d happily pay-per-view for the occasional visit to BBC iPlayer. Netflix plus Amazon feel like value for money and amazing choice — but the annual TV licence renewal is no more than a stealth-tax irritation. It’s a dead duck, even if the BBC itself still quacks on its behalf.
Told you so, António
When former Lloyds boss António Horta-Osório became chairman of loss-riddled Credit Suisse in Zurich last year, I warned him here that he was venturing into a snake-pit of accumulated scandal and poisonous internal politics. Now he has resigned after only nine months having been found in breach of Covid quarantine rules — reportedly including a cheeky trip to the Wimbledon tennis finals. Horta-Osório says he’s ‘proud of what we have achieved together in my short time at the bank’ but rumour says colleagues’ resentment of his attempted reforms played a part in his ousting.
Whatever, the story fits the current narrative of elites who believe rules don’t apply to them — and reminds me of two other episodes, one closely connected, the other a telling glimpse from long ago. First, the words of another City chief over lunch last summer: ‘I run a business that contributes billions to the economy, I need to talk to European investors face-to-face and I can’t afford the quarantine time. So I asked [a Whitehall contact] to ask Downing Street if I could have a free pass. But the answer came back, “No chance, chum, these rules apply to everyone”.’
So far so good, but now let me teleport you to the old Spectator house in Doughty Street on Thursday 7 July 2005 — which would have been the day of our annual party but turned out to be the terrible day of London bombings, including one in nearby Tavistock Square. Our editorial meeting was interrupted by one of the sensible ladies who (then as now) really ran the place.
‘We’re in a war zone,’ she said, ‘We’ve got to cancel the party.’ ‘Oh no!’ the then editor thumped his desk, ‘Let’s have a party — bulldog spirit, what?’ They cancelled it anyway, without asking him again.