Heseltine calls for government role in foreign takeovers

 
Heseltine Lord Heseltine is a former trade minister and an adviser to the prime minister on economic growth

Related Stories

Conservative peer Lord Heseltine has said the government should have greater powers to intervene when British companies are the target of takeover bids by foreign businesses.

The former deputy prime minister told the BBC takeovers "could be very helpful", but the UK should do more to protect its national interests.

This week, American drugs giant Pfizer announced it was bidding for British pharmaceutical company AstraZeneca.

The firm has 6,700 employees in the UK.

If successful, the deal would be the biggest ever takeover of a UK business by a foreign company.

Lord Heseltine, who is an adviser to Prime Minister David Cameron on economic growth, told the BBC's business editor Kamal Ahmed that ministers should have "reserve powers" to protect British companies when crucial interests, such as the country's science base, were at risk.

"Foreign takeovers can often be hugely helpful and I have no doctrinal preoccupations - I've done enough takeovers of small businesses myself to know how valuable they can be," he said.

"But the important point is that every other advanced economy has mechanisms of some sort on a failsafe basis to scrutinise foreign takeovers and we're the only country that doesn't."

AstraZeneca AstraZeneca employs many scientists and researchers and has links to top British universities

The proposed acquisition of AstraZeneca has prompted protests by some who feel the deal would jeopardise Britain's science and medical industries.

AstraZeneca has eight sites in the UK and about 6,700 employees.

'Reserve powers' needed

Pfizer has said it would relocate large parts of its business to the UK, if the deal goes through. It has also suggested it wants to invest in research which could create more jobs.

But Lord Heseltine expressed his reservations over the deal.

Start Quote

I think there are so many issues about the science base, about the supply chains about employment prospects that ought to be explored”

End Quote Lord Heseltine

"There are so many issues about the science base, about the supply chains, about employment prospects that ought to be explored and I don't see any way in which this can be adequately done unless the government has reserve powers.

"It's a question of where their headquarters are, where the decisions are taken, who determines what research is done and where, how much government money goes into supporting the science base within a co-operative arrangement, where the supply chains are going to be and what the motive is," he said.

Labour's business spokesman Chuka Umunna, who has also criticised the proposed deal, said ministers already had powers to intervene in takeovers in certain circumstances and his party was looking at whether these should be strengthened as party of its pre-election policy review.

Bentley boosted

Some British business figures have benefited from foreign buyouts.

Michael Straughan, a board member for manufacturing at Bentley Motors, which was bought by Volkswagen Group at the turn of the century, says the company grew as a result of the takeover.

"Volkswagen has invested millions and millions of pounds in new models and infrastructure here at the site in Crewe," he told the BBC.

"The benefit of being owned by such a big company like Volkswagen is the use of technologies from group, which as a very small brand we could never afford on our own."

Bentley British stalwart Bentley Motors is now owned by German firm Volkswagen
Made in France

Earlier this week, French president Francois Hollande summoned the boss of General Electric to the Elysee Palace, after the company announced its interest in buying Alstom - makers of the iconic TGV trains and one of France's biggest private sector employers.

The country's economy minister, Arnaud Montebourg, said the government wanted "to make sure that French companies... do not become prey."

The French government is famously protective of its national companies. Back in 2005, an attempt by Pepsico to buy France's Danone was blocked by the government, who claimed it was a strategically important company.

Last year, Yahoo abandoned a bid to buy French online video site Dailymotion, following objections from government officials.

In stark contrast, the UK is the "most open market on earth" for foreigners to come and buy businesses, venture capitalist Jon Moulton told the BBC.

While highlighting the many benefits, including more readily-available capital, competitive pressure on companies, and a better deal for shareholders, Mr Moulton says "people who are buying from overseas are undoubtedly biased towards their own bases".

"It's not likely that somebody who's running a Chinese manufacturing plant will have much empathy for how a UK plant should be run."

 

More on This Story

Related Stories

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    +29

    Comment number 240.

    Heseltine is absolutely correct.

    Free competition is clearly the overriding aim but no country allows everything to the market when there is often substantial personal gain for managers & deal makers but potential loss for the other stakeholders in society including the economy as a whole.

  • rate this
    +31

    Comment number 125.

    This is deeply disturbing. It's not just that 6,700 jobs are at risk, it's the nature of those jobs. Most are high-skilled scientists and technologists, the kind of people who will keep the UK competitive over the next 30-50 years. Losing these people (inevitably abroad) would be catastrophic.

  • rate this
    +39

    Comment number 29.

    The UK produces something worth making here and what happens, the company is bought out and shipped abroad. If we want to be great again, we need to stop this from happening.

  • rate this
    +95

    Comment number 6.

    Once everything's been sold, what do we do then? There will be nothing stopping a foreign company from contracting its UK base & bringing design, development & manufacturing to its own country. Skills will leave the UK & once gone, that's it. Let's do what the Germans, French & most other countries do & protect our industries.

 
 

More Business stories

RSS

Business Live

  1.  
    09:21: Paddy Power results
    World Cup

    It's a lucky day for Paddy Power investors after the company said it will return €392m cash to shareholders after failing to find any potential bid targets. Operating profit jumped by a better than expected 19% to €163.8m for 2014, helped by last summer's World Cup, which was won by Germany.

     
  2.  
    Barclays results Via Email Chirantan Barua Bernstein Research

    Dividends were held flat for the fourth quarter at 3.5p as compared to last year and came in lower than consensus at 3.7p. Non-progressive nature will be taken as marginally negative and also highlights that the bank's key focus continues to be capital build.

     
  3.  
    08:53: Business Matters World Service
    Royal Enfield

    Can India's cities become cleaner and greener? Business Matters on the World Service is live from Chennai all week. In the first programme Fergus Nicoll asks whether the infrastructure is fit for purpose - and visits an Indian success story with its roots in Britain: Royal Enfield motorcycles. Listen here.

     
  4.  
    08:41: Barclays
    Barclays shares

    Shares in Barclays are down 2.3%, or 6.15p, at 256.6p in morning trading in London. The stock has not moved much over the past 12 months given that it's just 8.7p higher than the price on March 4 last year.

     
  5.  
    08:27: Ford BBC Radio 4
    Ford Mustang

    Jim Farley, Ford's European president, tells presenter Simon Jack on Today that he hopes Britain does not leave the European Union. One in three engines made by the company comes from the UK, which he described as the "centrepiece" of its global enterprise. Asked about the Russian market, Farley said Ford believed in it in the long term but admitted that some short-term adjustments were required because of the volatile economy.

     
  6.  
    08:14: Taylor Wimpey results
    house

    If you're a house builder and you're not making piles of money, then something is very wrong. Fortunately for Taylor Wimpey that is not the case. Annual pre-tax profits are up two thirds to £450m before one-off deductions as 12,454 homes were completed across the UK - 758 more than in 2013 - with an 11.5% rise in average selling price to £213,000.

     
  7.  
    07:56: Barclays results
    Barclays

    While Mr Jenkins takes his first annual bonus with Barclays, the overall 2014 bonus pool for the bank is down £520m to £1.86bn. Most of the total - £1.05bn - goes to the investment bank. Its capital ratio, a measure of strength against unexpected losses, is up to 10.3% from 9.1%.

     
  8.  
    07:44: Barclays results BBC Radio 4
    Jenkins

    Barclays chief Antony Jenkins is on Today. The bank is the healthiest it has been since the financial crisis, he says. Changing culture at the bank takes a long time, Mr Jenkins adds, but the "vast majority" of his 130,000 bankers "want to do the right thing". He is taking a bonus of £1.1m after the "huge amount of progress" the bank has made. Asked about the topic du jour, Mr Jenkins says he pays all his tax in the UK and as a US green card holder.

     
  9.  
    07:37: Barclays results

    Barclays wrote down the value of its education, social housing and local authority loan portfolio by £935m. Last year the portfolio was valued at just less than £16bn, but at that time, the lender reclassified the loans as "level 3" assets. That's City-speak for loans you cannot value easily because they don't sell very often.

     
  10.  
    07:24: Direct Line results
    Direct Line website

    It's been a good 2014 for Direct Line, with pre-tax profits up 12% to £456.8m and a windfall of £430m from the sale of its international business. Shareholders will pocket total dividends of 27.2p per share, up from 20.6p in 2013. Harvey Keitel probably pocked a pretty penny too for featuring in its TV ads.

     
  11.  
    07:16: Barclays results

    Antony Jenkins will take his first bonus as chief executive of the lender: £1.1m. The bank also said it would increase its provision for payment protection insurance (PPI) by £200m for the last three months of 2014, taking the year's total to £1.1bn. Excluding these provisions and other things the bank considers one-offs, pre-tax profit rose 12% to £5.5bn. But including the nasties, the figure sank 21% to £2.26bn.

     
  12.  
    07:03: Barclays results
    bank

    Barclays have posted their 2014 results. They have set aside an extra £750m after those investigations for foreign exchange manipulation, taking the pot to £1.25bn.

     
  13.  
    06:53: Barclays BBC Radio 4
    Barclays

    Chris Wheeler, of Atlantic Equities, has also popped up on Today. He tells Simon Jack that Barclays is doing only "averagely well ... it's still work in progress". He expects pre-tax profits to be about £5.2bn when the bank reports its annual results at 7am.

     
  14.  
    06:35: Markets performance Radio 5 live

    Justin Urquhart-Stewart of 7 Investments is still on 5 live. "We are dealing with companies that make a profit and make things," he says of the Nasdaq's rally. The dotcom boom was based on companies that failed to make money, although "we have to be wary" because markets in 2015 are gorged on cheap money and cheap debt.

     
  15.  
    06:23: Barclays results Radio 5 live

    Chris Wheeler of Atlantic Equities is talking about Barclays. £5.2bn pretax profits are on the cards for the bank in its annual results, he estimates - a tad ahead of last year's result. However, "it's the return on equity that counts", he says. The bank is struggling to make 10%, which for a high-risk endeavour like banking is not where you want that figure, Wheeler adds. Results come at 07:00.

     
  16.  
    06:11: Markets performance Radio 5 live

    Justin Urquhart-Stewart of 7 Investments is on 5 live as the markets guest. "You have a global economy in pretty good shape and in the eurozone some better figures," he says, following soaring US markets. The FTSE 100 may grow further if there's better sentiment from China, he adds.

     
  17.  
    06:02: Mobile World Congress Radio 5 live
    Kazuo

    Rory Cellan-Jones, technology correspondent, is in Barcelona at the Mobile World Congress. Sony chief executive Kazuo Hirai is "making some tough decisions" and focusing Sony on things like films and games and camera technology: the areas that make money, he tells 5 live. Like many companies, it's finding mobile phones a tricky market.

     
  18.  
    06:00: Chris Johnston Business reporter

    Get in touch via email bizlivepage@bbc.co.uk or on twitter @BBCBusiness

     
  19.  
    06:00: Howard Mustoe Business reporter

    Good morning! US stocks hit record levels, with both the Dow Jones and the S&P 500 closing at all-time highs and the Nasdaq breaking the 5,000 barrier for the first time in 15 years. Is that going to last? Stay tuned for more.

     

Features

  • Mukesh SinghNo remorse

    Delhi bus rapist says victim shouldn't have fought back


  • Aimen DeanI spied

    The founder member of al-Qaeda who worked for MI6


  • Man in pollution mask in BeijingSmog storm

    Chinese climate film inspired by baby's tumour goes viral


  • Before and after shotsPerfect body

    Just how reliable are 'before and after' photos?


From BBC Capital

Programmes

  • 3D model of Christ the Redeemer statueClick Watch

    Using drones to 3D map the famous Brazilian landmark Christ the Redeemer

Try our new site and tell us what you think. Learn more
Take me there

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.