Banks slam plan to shake up takeovers

LABOUR manifesto proposals to make mergers between companies more difficult to complete came under fire from the City’s investment banking community yesterday.

The government controversially said all takeovers – whether hostile or not – should require the approval of 66 per cent of shareholders rather than the current straight majority.

It also said a “public interest test” should be applied to bids for strategically important companies such as energy and utilities operations. The idea will be of interest to Centrica, formerly British Gas, which is rumoured to have been eyed by Russia’s state energy giant Gazprom on and off for years.

The final decision on voting thresholds would rest with the Takeover Panel, the mergers watchdog. In a separate review, the panel is looking at whether to strip short-term shareholders such as hedge funds of voting rights during bids.

Lord Mandelson’s measures, trailed as a “Cadbury’s law” after calls from the chocolatier’s former chairman Roger Carr, met with derision in the Square Mile yesterday. Several senior bankers warned they would amount to the unravelling of 40 years’ accumulated wisdom on takeovers for political ends.

One said: “I don’t think anyone in the City is particularly keen on most of this stuff. Most market professionals will look down the list and say ‘no thanks – not necessary’.”

Another said: “Things work pretty well as they are. Why would we want to change it to what it used to be the case in France or Germany? It’s a fair and open system, and that’s to the benefit of all concerned rather than just shareholders and managements.”