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How Much is a Corbyn?

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Comments

  • michaels
    michaels Posts: 29,133 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Generali wrote: »
    I disagree with that quite fundamentally.

    The reason why the Board of Directors is prepared to pay a premium for another company is because the larger the company the more the board is paid for running it.

    About 65% of mergers and takeovers destroy value for shareholders of the buying company. More than that (can't recall the proportion though) result in the remaining directors earning more.

    The responsibility of the company directors is of course to maximise shareholder value so are you suggesting they are failing to do so. Given that to a first approxmation 'all' takeovers result in a reduction in shareholder value surely the first thing shareholders would do if their board members attmept a takeover would be to savk the board.

    In the UK recently there has been a reduction in the number of mobile operators through takeovers, presumably this saves money by reducing duplication of infrastructure and other costs, increases buying power and I suspect most importantly reduces competiotn in the market which economic theory tells us will result in higher profits fo the remaining suppliers (a reduction from 5 to 3 must be significant). Thus economic theory would tell us that the merged entity should be worth more than the sum of the parts, hence funding a takeover premium.

    Well that's the theory anyway!
    I think....
  • antrobus
    antrobus Posts: 17,386 Forumite
    a subjective article about "failure" of an acquisition, without defining what they mean by failure....

    The article contains the statement "Yet study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%." Do you think that the authors of that article made up the existence of those studies?
  • martinsurrey
    martinsurrey Posts: 3,368 Forumite
    antrobus wrote: »
    The article contains the statement "Yet study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%." Do you think that the authors of that article made up the existence of those studies?

    failure in that article is NOT destroying shareholder value, which is what we are discussing.

    if I say I will buy something and give you a return of 900% but only deliver 800% that would be defined in the above article as a failure, even if by buying it I doubled shareholder value (because I forecast I would triple it).

    the devil is in the detail.
  • wotsthat
    wotsthat Posts: 11,325 Forumite
    michaels wrote: »
    The responsibility of the company directors is of course to maximise shareholder value so are you suggesting they are failing to do so. Given that to a first approxmation 'all' takeovers result in a reduction in shareholder value surely the first thing shareholders would do if their board members attmept a takeover would be to savk the board.

    Probably need to account for human nature somewhere.

    It's hard to imagine a director of a takeover target acting altruistically for the benefit of the shareholders if they'll personally lose or gain from the deal.

    Likewise the directors of the buyers must find it hard not to be a tiny bit excited about the opportunity to be a director of a much larger company and the status and remuneration that goes with it.

    I bet it was massively exciting in the RBS boardroom as they set about destroying the owners of the company. I expect many shareholders were excited too despite the later cost.
  • antrobus
    antrobus Posts: 17,386 Forumite
    MS1950 wrote: »
    ...Nevertheless, as I said in my original post, I think any serious discussion of 'Corbynomics' has got to address the NEF source of his ideas rather than simply accusing him of of “wanting to turn the clock back”.

    As far as I'm aware, Corbynomics is not sourced from the NEF. Corbynomics is sourced from that reasonably well-known retired accountant from Wandsworth called Richard Murphy. Now, as it happens, I am of the opinion that Richard Murphy is a crazy mad person, and so it is perfectly possible that since many of those working for the NEF are also crazy mad persons, the two of them way well have come up with very similar crazy mad ideas.

    But I don't know that for sure. And life is really too short to spend that much time working it out.
  • BobQ
    BobQ Posts: 11,181 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Combo Breaker
    the only way to run an efficient train service is to nationalise it - and then staff it with people that will get prison time if they run late or any similar problems.


    We all know public sector attitudes. I have seen staff leave a man bleed to death in a station because they were on a tea break so couldn't call an ambulance.


    Therefore, money "allegedly" is not the issue. If a train is late - barring some kind of "natural" disaster, the management AND driver should be given 5 years inside.


    Then we'd see it run efficiently.

    I doubt this happened but presumably it was given some press coverage (link please?)
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
  • MS1950
    MS1950 Posts: 325 Forumite
    Part of the Furniture 100 Posts
    antrobus wrote: »
    As far as I'm aware, Corbynomics is not sourced from the NEF. Corbynomics is sourced from that reasonably well-known retired accountant from Wandsworth called Richard Murphy. Now, as it happens, I am of the opinion that Richard Murphy is a crazy mad person, and so it is perfectly possible that since many of those working for the NEF are also crazy mad persons, the two of them way well have come up with very similar crazy mad ideas.

    But I don't know that for sure. And life is really too short to spend that much time working it out.

    Yes I was also aware of Richard Murphy and his role but as far as I can see he hasn't written in as much detail about what he calls 'People's QE' as the 'New Economics Foundation' have on what they call 'Strategic' QE.

    It's also worth mentioning that (for example) Mathew Klein in the FT doesn't seem to think that the idea is quite as "crazy mad" as you do:

    http://ftalphaville.ft.com/2015/08/06/2136475/corbyns-peoples-qe-could-actually-be-a-decent-idea/?
  • BobQ
    BobQ Posts: 11,181 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Combo Breaker
    While I think Corbyn will be a disastrous leader of the Labour Party, let alone the country, let us just suppose that he gets elected (for the sake of argument, not because it is likely). He would have a democratic mandate for re-nationalisation.

    So is it possible that the use of additional regulatory powers could make the industries concerned worth less than the sums people are quoting?
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
  • BobQ
    BobQ Posts: 11,181 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Combo Breaker
    Generali wrote: »
    It sounds like they stuck on a 10% takeover premium.

    To be completely fair, the putative Labour Government would then be left with a load of foreign assets that could then be sold as not required.

    I have my doubts that the French Government would allow the English Government to buy EdF, even at a premium. Especially given that the French Government owns ~80% of the shares in EDF (I'd forgotten that EDF was mostly owned by the French state, I have been out of the UK markets for a long time in my defence).

    So Corbyn has promised to nationalise a company majority owned by the French Government. Generally you can only do that by war. I know the Left like to hark back to the past but unwinding the entente cordiale is a bit much:rotfl:


    I do not recall Mr Corbyn saying which nation would own Corbyn Power. Maybe EDF could be left alone and allowed to compete with Corbyn Power:)
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
  • Masomnia
    Masomnia Posts: 19,506 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    This people's QE business all sounds a bit Zimbabwe if you ask me.

    Also doesn't it imply that he'll be looking to take back the bank of England's independence?
    “I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse
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