Another one goes…

ruggedtoast

Some friends visited yesterday. That’s an old uni chum, S, and his wife from the States, B, I haven’t seen them for a while so it was good to catch up.

I found that in the months preceding their visit S’s company has been taken over by an American organisation. His company is profitable, successful, growing and employs a large number of people in London, though this didn’t save them from being bought out.

At the moment the parent company is flying managers back and forth at great expense from the US so they can determine what costs they will cut and who they will lay off in London.

B;s company has just been taken over by a huge Japanese corporation. Aside from a huge American corporation, it provided the only end user alternative to the huge Japanese corporation that has just bought them out, as well as employing hundreds of people.

B says the new Japanese owners have intimated that within the next two years they’ll be laying off as many of the operational staff as possible and completely shutting down head office. So that’s two more profitable, sustainable British companies bought out, asset stripped, and downsized by foreigners (from countries who would impose far more restrictions on British firms attempting to invest there) ; leaving British customers with even less choice, and without so much as a peep from our regulatory authorities. Add another few hundred people on the dole queue and that seems to pretty much sum up the Thatcherite free market model we live under.

I was listening to all this and I thought – God. Is this all this country can do now? Are our only notable economic achievements now going to be selling weapons, flogging off our companies to people who shut them down and then put us out of work; and saddling people with enormous debts just so they can put a roof over their heads?

In any case, S & B are sanguine about it as they're moving back to the US. B says she'd like to stay here but "unless someone's going to buy you a house its impossible to have a life here".

I just can’t believe this can continue, surely at some point theres going to be nothing left to sell, no more expertise to offshore, no new money to join the housing pyramid.

CLAPTON

you don't say what companies you are referring to but it's simply part of the normal business cycle

a business is sold
it's shareholders were prepared to sell at that price
they now have money to invest in new opportunities
maybe those new opportunities will create new jobs and new wealth
later some-one may come along and buy that new company
so a busness is sold
it's shareholders were prepared to sell at that price
...........

today I read that exports are up... some good news
they now have money to invest in new opportunities

Thrugelmir

Nothing new. We don't take a long term view of investments in the UK. Too many people just want to make a quick buck. Soon it'll come back to haunt us.

Though having said that they are a lot of extremely talented people creating new ventures. So the longer term looks a lot lot brighter.

ruggedtoast

CLAPTON wrote: »

you don't say what companies you are referring to but it's simply part of the normal business cycle

a business is sold
it's shareholders were prepared to sell at that price
they now have money to invest in new opportunities
maybe those new opportunities will create new jobs and new wealth
later some-one may come along and buy that new company
so a busness is sold
it's shareholders were prepared to sell at that price
...........

today I read that exports are up... some good news
they now have money to invest in new opportunities

Thats all very well but as the chances of them reinvesting in the UK are comparatively small, and once the jobs from the bought out company are gone they are gone, I dont see how this helps our country.

I know that Japanese companies are not as susceptible to predatory foreign takeovers (I used to live there) as British ones. And anyyone who wants to buy a Japanese company and put Japanese people out of work will have an uphill struggle.

It may be that this is the model towards prosperity and the current problems are due to us not having sold enough businesses yet, and maybe we havent made enough people unemployed to really see the full benefit.

I just dont totally get the upside.

Kohoutek

The total collapse of our currency doesn't help...at peak in 2007 £1 was worth ¥250, now £1=¥144. Against the dollar in 2007, £1=$2.08, now £1=$1.59. British companies are easy pickings.

We lost Cadbury a couple of weeks ago to the Americans, now a Canadian Pension fund is taking over one of few utility companies left that is British owned:

http://news.bbc.co.uk/1/hi/business/8490794.stm

zygurat789

CLAPTON wrote: »

you don't say what companies you are referring to but it's simply part of the normal business cycle

a business is sold
it's shareholders were prepared to sell at that price
they now have money to invest in new opportunities
maybe those new opportunities will create new jobs and new wealth
later some-one may come along and buy that new company
so a busness is sold
it's shareholders were prepared to sell at that price
...........

today I read that exports are up... some good news
they now have money to invest in new opportunities

More likely ther're going to buy houses and hope for a quick buck. That's not creating real wealth.
This seems to be a problem in this country, people being totally obsessed with house prices, just read this board. Money is borrowed and poured into houses at the expense of commerce and industry and so our economic capacity is reduced.
The real problem is how to stop this happening, the removal of tax refief on mortgage interest didn't work and we don't have the space or the resources (they've all gone into houses) to build enough property to satisfy the market.
What's needed is a mortgage interest surcharge so that all mortgages are subject to (say) 10% interest, the surplus over the going rate could then be channeled into more wealth producing investments.

CLAPTON

ruggedtoast wrote: »

Thats all very well but as the chances of them reinvesting in the UK are comparatively small, and once the jobs from the bought out company are gone they are gone, I dont see how this helps our country.

I know that Japanese companies are not as susceptible to predatory foreign takeovers (I used to live there) as British ones. And anyyone who wants to buy a Japanese company and put Japanese people out of work will have an uphill struggle.

It may be that this is the model towards prosperity and the current problems are due to us not having sold enough businesses yet, and maybe we havent made enough people unemployed to really see the full benefit.

I just dont totally get the upside.

We don't know the companies concerned.

Companies have always been started, floated, bought, sold etc.
Presumably the majority of shareholders will be institutional investors and are unlikely to buy houses (and if they had wanted to, they could have anyway sold their shares and bought house anyway).

Job loses and new jobs are also the normal cycle of business; people felt passionately about the loss of coal mining jobs, british car industry (mind you they didn't buy british cars) etc etc.
Of course it's sad for individuals concerned but if it didn't happen we would all still be hunter gathers or subsidence farmers, metal bashers or miners.

CLAPTON

zygurat789 wrote: »

More likely ther're going to buy houses and hope for a quick buck. That's not creating real wealth.
This seems to be a problem in this country, people being totally obsessed with house prices, just read this board. Money is borrowed and poured into houses at the expense of commerce and industry and so our economic capacity is reduced.
The real problem is how to stop this happening, the removal of tax refief on mortgage interest didn't work and we don't have the space or the resources (they've all gone into houses) to build enough property to satisfy the market.
What's needed is a mortgage interest surcharge so that all mortgages are subject to (say) 10% interest, the surplus over the going rate could then be channeled into more wealth producing investments.

and your signature is ' the only thing constant is change' somewhat bizarre really

Thrugelmir

CLAPTON wrote: »

We don't know the companies concerned.

Companies have always been started, floated, bought, sold etc.
Presumably the majority of shareholders will be institutional investors and are unlikely to buy houses (and if they had wanted to, they could have anyway sold their shares and bought house anyway).

Job loses and new jobs are also the normal cycle of business; people felt passionately about the loss of coal mining jobs, british car industry (mind you they didn't buy british cars) etc etc.
Of course it's sad for individuals concerned but if it didn't happen we would all still be hunter gathers or subsidence farmers, metal bashers or miners.

The reason that there was no defence of Cadburys, was that over 50% of the share register was owned by US institutional investors and hedge funds prior to the bid. So there was never a chance of hanging onto the Company in these circumstances.

To say that its a business cycle is very short sighted. Foreign investors know the value of brands. Something which takes years to build and cannot be bought.

CLAPTON

Thrugelmir wrote: »

The reason that there was no defence of Cadburys, was that over 50% of the share register was owned by US institutional investors and hedge funds prior to the bid. So there was never a chance of hanging onto the Company in these circumstances.

To say that its a business cycle is very short sighted. Foreign investors know the value of brands. Something which takes years to build and cannot be bought.

I don't know whether or not that a fact but if it were so it was because british investors (both individuals and institutional) chose to sell originally and/ or chose not to re-buy.

What would you like to happen: maybe a govenrment department buying shares on behalf of us all because british companies are too stupid to spot a bargain?

vivatifosi

CLAPTON wrote: »

Companies have always been started, floated, bought, sold etc.
Presumably the majority of shareholders will be institutional investors and are unlikely to buy houses (and if they had wanted to, they could have anyway sold their shares and bought house anyway). miners.

Don't disagree that companies have always been started, floated, bought, sold etc, but there is a shocking disparity between the number of UK companies sold to overseas companies and those from other countries sold under similar circumstances. Equally, to be fair to foreign companies, more of them (particularly from the US) have chosen to move here due to the lack of language barrier and shorter time diference.

There is a massive reliance on foreign ownership in this country. I spent 16 years monitoring UK companies and identifying foreign parentage. Sometimes the degree of foreign ownership is not immediately apparent, because the ownership is through shareholdings rather than as a wholly owned subsidiary however I'd say this, we had as many US parented company enquiries in the UK as the whole of the rest of the EU put together (though this was before the most recent wave of EU entrants, so I'd expect that to have gone down a bit since). We also had a higher percentage of Japanese investors, though again this was before the inward investment from China etc started and I don't know how this has panned out.

While I'm less worried about asset stripping of these companies than Rugged, I'm very concerned about the impact of the ongoing threats to pull out of the EU. We could potentially lose a huge number of foreign parented companies if we leave as they will want to stay where the market access is and there are plenty of other low cost (and relatively good English speaking) economies that they can go to instead. I'm also worried about what will happen if labour gets back in and makes the situation for businesses more onerous than it already is.

If I get a mo to run some reports (won't be this week and will take a while to do) I'll try and populate this with some numbers as the data is not straightforward to get.