De La Rue’s explanation of why it now accepts defeat in the contest to print the UK’s post-Brexit blue passport is feeble. Apparently, the company has engaged in intense consideration for the past four weeks and received clear legal advice. Come on. Five minutes of casual reflection in the boardroom a month ago should have been enough to recognise the reality of the situation.
The bid from Gemalto, the Franco-Dutch rival, was £120m lower than De La Rue’s over the 11-year contract, so the UK government was never likely to perform a protectionist U-turn that would have made a nonsense of ministers’ rhetoric about the UK being open for business after Brexit. A pause for thought might also have saved Martin Sutherland, De La Rue’s chief executive, from making himself look a fool.
Sutherland started the process of working the nation, or part of it, into a fine frenzy last month by grumbling about how it was terribly unfair that Gemalto had got the gig. He challenged the prime minister to visit De La Rue’s factory in Gateshead to explain to workers why she thought it sensible “to offshore the manufacture of a British icon”.
Now, after talking up the prospects of an appeal, he’s capitulated. Bidding for contracts, and sometimes losing, is deemed to be part of the rough and tumble of business. As for the threat to jobs in Gateshead, Sutherland points out that the current contract with the Passport Office has another 18 months to run, which leaves plenty of time to find alternative contracts to fill the gap.
The government’s position has been more clear-sighted from the outset. This was an open competitive tender. Quality was prioritised and the savings from Gemalto’s bid were substantial. The new supplier already produces UK driving licences. Some of the new passports will be produced by Gemalto in its factories in Britain.
Sutherland, one must assume, was hoping that the bizarre excitement over the return of the blue(ish) passports would somehow override the extra costs to taxpayers. For a company that boasts about its global footprint and work with governments, central banks and commercial organisations in over 140 countries, it was the wrong card to play.
It is equally odd that Labour shadow ministers, from Keir Starmer to Diane Abbott, thought it wise to back a doomed campaign to impose extra costs on the public purse for the sake of symbolism. There are interventionist industrial causes that are worth backing. This was not one.
Hammerson pair in last chance saloon
In a strong day for corporate about-turns, Hammerson abandoned its £3.4bn bid for its shopping centre rival Intu, more than four months after terms were agreed. The target squealed about the explanations being unsatisfactory and, strictly speaking, Intu has a point. The Hammerson chairman, David Tyler, and the chief executive, David Atkins, were banging on about how they were fully committed to the deal a month ago.
For practical purposes, though, Intu shouldn’t waste its breath. This deal has been dying for weeks, for the reason given in my previous column: too many Hammerson shareholders hate it. They didn’t want an acquisition that involved printing new shares at a heavy discount to asset value to buy an Intu estate they regard as inferior.
The heaviest blow was struck by the Dutch pension fund APG, Hammerson’s second biggest shareholder, which said last week it would vote its 7% stake against the deal. Even JO Hambro, with a 1.8% holding and trying to sound supportive of the board, could only rouse itself to say it was not negative on the Intu idea, which was some way short of being a positive endorsement.
Hambro’s stance, however, suggests heads won’t roll. The Intu saga, interrupted by the brief excitement of French group’s Klépierre’s bid approach to Hammerson, has embarrassed Tyler and Atkins, but they’ll probably be allowed to attempt a plan B. So far, that involves reassessing “the optimal portfolio mix” and accelerating the delivery of value to shareholders, which is far too woolly to be useful. But at least the pair appear to realise they are in the last chance saloon.
Poor excuse over timing of another M&S departure
Another reason for executives to avoid Twitter. Patrick Bousquet-Chavanne contrived to announce his departure as Marks & Spencer’s marketing chief before the company had made its formal stock exchange announcement, which is procedural no-no for a main board director.
Nobody really cares because management rejigs at M&S arrive at a rate of about one a week these days, but Bousquet-Chavanne’s excuse was particularly poor. He was in Spain and didn’t take account of the time difference.
