Foreign money is often good money, so why the automatic suspicion about overseas owners?
For obvious reasons, pharmaceutical companies rarely get a mention in Drapers, but I have been intrigued over the past few weeks about the debate over Pfizer’s bid for AstraZeneca. The attempt by the American company to take over the Anglo-Swedish firm has prompted debates in Parliament and extensive columns in the press highlighting the perceived dangers to our scientific well-being if we Brits lose control of AZ to the Yanks.
Leaving aside the small matter that AZ is, as far as I can see, only part-British anyway, I wonder what the reaction would have been if it had made an offer for Pfizer, which has its research centre in Connecticut. No doubt this would have been hailed as a bold move by a go-ahead British concern. I find it odd when poorly concealed jingoism comes into the business pages and the suggestion is made or implied that all things British are great and Johnny Foreigner cannot be trusted. This an interesting business story, however, and one with astonishing figures attached to it - the value of Pfizer’s offer at the time of writing was about £63bn (yes, billion) and it seems likely to go higher to land its prize.
As I live near Sandwich in Kent, where Pfizer used to have its largest research centre outside the US, I know why there are some misgivings about the company’s intentions. In early 2011, Pfizer announced the closure of this state-of-the-art facility with the loss of 2,400 jobs. This was a tremendous blow from the district’s largest employer; in the event, about 600 jobs were retained, but the resentment about the strategic decision to close Sandwich has affected the current debate.
The pharma giants’ tussle, of course, comes close behind the recent acquisition of House of Fraser by Sanpower, a Nanjing-based conglomerate. To my surprise, when the story first broke, there was some talk in the national press along the lines of “another great British institution falling into foreign hands”. These commentators seemed to forget HoF’s previous owners, largely, had been Icelandic (Baugur and Glitnir) and not long before that Egyptian (Mohamed Al Fayed). Also, HoF was not exactly beating British suitors off with a sharp stick, so good luck to the board for finding a buyer and to Sanpower’s chairman Yuan Yafei. If he has deep pockets and a long-term vision, he could make the store group a success, here and overseas, especially in China.
There are plenty of foreign owners of prominent British retailers and brands and there is nothing to suggest that non-UK ownership is any worse than domestic ownership. Fred Perry, Margaret Howell and Mackintosh, for example, have thrived under Japanese ownership, although the same cannot be said of Aquascutum and Daks. Aquascutum, of course, did even worse when Harold Tillman bought it. Jaeger also suffered under Tillman’s control, but it seems to be back on track under its new British owners, Better Capital.
Other prize assets in “foreign” hands include Harrods (Qatari), Harvey Nichols (Hong Kong), Gieves & Hawkes (Hong Kong), Laura Ashley (Malaysian), Church’s (Italian), Hackett (Spanish) and Barrie Knitwear (French). Allowing for the ebb and flow of trade, their owners have often been generous. It is very rare for UK-based investors to be the under-bidders in any such acquisitions, so perhaps we ought to be pleased that the best of British is still attractive to overseas money.
As always, your views will be welcome on Drapersonline.com. If you are a subscriber who has not registered for full access to the site, please don’t delay in making the most of Drapers.