Revamp of the Takeover Code offers a Cadbury fudge, mystery at Transferwise and TPG's Capital Moves

Mark Kleinman
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Chocolate Production Continues At Cadbury During Hostile Takeover Bids
The UK government is preparing a fudge that Cadbury’s Bournville factory would have been proud of (Source: Getty)

What links a chocolate factory near Birmingham, a tub of Flora margarine and a British-designed chip that tells you when your fridge is running low on milk?

Other than the obvious dairy theme, the answer is that the companies behind them – Cadbury, Unilever and Arm Holdings – have all had skirmishes with bidders highlighting gaps in the UK Takeover Code.

This week, ministers and Takeover Panel officials launched an effort to change that. They published proposals that would require bidders to be more specific about their intentions towards their target’s R&D function and workforce at an earlier stage of the deal process.

Annual compliance statements will be required from corporate acquirers.

Greg Clark, the business secretary, endorsed the new blueprint – hardly surprising given it potentially delivers that rarest of things in British politics: a fulfilled Tory manifesto pledge.

Yet there are reasons to suspect that little will change. Acquirers would still be able to cite material changes to business circumstances to renege on ‘intentions’ outlined during bids.

Read more: Hundreds of jobs may be lost as Cadbury Fingers production could be moved

Bidders could choose not to make their commitments binding, which is unlikely to bother most investors. And unions’ desire for assurances about steel industry jobs after a putative Tata Steel-Thyssenkrupp merger highlights the fact that many companies employing thousands of British workers sit outside the remit of the code.

So the attempt to present these measures as a panacea to the rapacious appetites of marauding foreign predators is disingenuous at best.

Compared to far more draconian reforms outlined by EU regulators in the last fortnight, the UK government is preparing a fudge that Cadbury’s Bournville factory would have been proud of.

Transferwise guys?

There’s plenty to admire about Transferwise, the payments app that's about to join a select group of British tech unicorns (companies with a coveted billion dollar-plus valuation).

Insiders tell me its latest funding round, which will add about $150m of new capital to its balance sheet, should be announced early next month. Transferwise’s biggest new shareholder, IVP, will add another dollop of Silicon Valley nous to a company which like most unicorns harbours thinly disguised ambitions to go public.

Are there alarm bells which augur poorly for a future IPO, though? After all, Transferwise’s two co-founders are selling a chunk of their stakes for the first time since launching it six years ago.

Read more: Transferwise founders to sell first shares in fintech unicorn funding round

Institutional investors understandably become jittery if they see management trying to cash in too much of their equity during company floats while asking others to commit long-term capital.

But Taavet Hinrikus and Kristo Kaarmann are retaining the vast majority of their shareholdings. Andreessen Horowitz and Baillie Gifford are both, I’m told, buying more than their pro rata allocations, suggesting they’re comfortable with the founders’ sale.

More worrying may be the future of Hinrikus, who is planning to assume an increasingly non-executive chairmanship. Several other key employees are also said to be leaving.

That implies some uncertainty about the company’s direction. Resolving it will be key to the timing of Transferwise’s decision to join the ranks of quoted unicorns.

TPG’s capital moves

What’s going on in the London office of TPG Capital, the buyout firm whose former conquests include Debenhams and Kensington, the specialist mortgage lender?

Word reaches me of a flurry of top-level departures, with others, such as Abel Halpern, shifting from full-time executive posts to senior advisor roles.

Read more: Vice valued at $5.7bn after private equity investment

TPG denies that the move represents a reduction in its commitment to investing in UK buyouts, and argues that it is growing other areas of its business in London, including credit platform TSSP.

One to keep an eye on.

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