Pictured above: Professor David Bailey
A leading business expert at Coventry University has welcomed
the Business Secretary's call for tougher rules on takeovers.
Professor David Bailey from Coventry University's Business
School has been saying for many months that the Government should
bring in measures to give firms more protection from hostile
takeovers, whether by British or foreign firms.
Professor Bailey said: "I am pleased that Lord Mandelson
has finally seen sense but it has taken something like the Kraft
takeover of Cadbury to make him realise that something needs to be
done, and fast."
Lord Mandelson was speaking at the annual Trade and Industry
dinner last night and outlined a number of ways to tighten up rules
on takeovers including forcing bidders to reveal how they intend to
finance the takeover and raising the voting threshold to secure new
ownership to two-thirds.
Professor Bailey added: "It's a sad fact that most
takeovers fail to deliver the benefits that bosses at the takeover
firm claim, and certainly don't usually benefit their shareholders,
even before we consider the wider economic and social impact.
Profits usually stay the same or go down despite the huge outlay on
the takeover.
"I would like to see a public interest clause into UK
competition law which puts the onus on takeover firms to prove a
public interest benefit from the takeover.
"I would reduce the trigger point for firms having to notify the
target firms of their intentions to give the target firm more time
to defend themselves and I would call for using the tax system to
better reward long-term share holdings.
"Overall, we need to change the system so as to promote
long-term, active shareholder activism as the key driver of
effective corporate governance and management performance, rather
than the takeover bandwagon which benefits a few but does nothing
for business efficiency and causes wider social and economic
damage."