THE “disappointing” outcome of the takeover battle for Charter International shows that UK M&A deals are still too skewed in favour of short term investors, the £269bn fund manager Aviva Investors has said.
Aviva’s UK equities fund manager Graham Elliott-Shircore said Charter's shareholder base changed as short-term investors bought in during the bid period, leaving the board at odds with its long-term investors.
“Our views on what would have been our preferred outcome have been stated – it now looks like that isn’t going to happen. From our perspective that is a bit disappointing; financial markets and shareholders have played their role in that,” he told City A.M.
“The board’s position is very different to the long term shareholder views – the board’s perspective is perhaps that they delivered as high a nominal price as possible, whereas we considered the longer-term value we think an ownership by Melrose could have delivered, including sharing in the future upside.”
He stopped short of calling for a change to the Takeover Code, however, as Cadbury chairman Sir Roger Carr did after short-term shareholders approved the chocolate maker's sale to US foods giant Kraft.
Instead, he supported creating a more level playing field for all investors, adding that “Like all these situations it is a financial decision and that creates differing opinions.”
Elliot-Shircore also defended UK bank stocks, saying unlike many fund managers he remains slightly overweight on the sector in the belief that institutions such as RBS and Lloyds have a positive outlook.
“They are certainly high risk, potentially high return shares and that can work against you,” he said, but added that he believed concerns over the threat new regulation poses to their future performance were overdone,” he said.