He described Thames as a “recurring poor performer”. And he said Ofwat’s £126m penalty on Southern in 2019 for sewage and reporting breaches was instrumental in the change of ownership last year. “This is an example of a company that performed poorly, was held to account by Ofwat and investors lost their shirts,” Black argued. “It’s just as it should be.” What was failed to mention, however, was that the Ofwat-approved rescuer of Southern Water was none other than Macquarie, the giant Australian financial group whose ownership of Thames from 2006 to 2017 was characterized by a debt financing glut, large dividend mining. they lost spill targets and a major sewage disposal prosecution. Even Ofwat seemed to cheer when Macquarie left the capital. its then chairman called on the new owners to make “a change” in the way Thames “operates and behaves”. The decision to welcome Macquarie back to Southern, which serves 4.7 million people in Kent, Sussex, Hampshire and the Isle of Wight, was therefore heart-pounding. The justification given was that Macquarie came with good intentions and a much-needed capital injection of £1.07bn. Possible translation: Southern was in such a financial mess that any savior, regardless of his previous record in the field, was better than none. If so, this is not what most observers would describe as life continuing “just as it should.”
Retailer at discounted price
In March, Ted Baker’s board rejected takeover proposals at 130p and 137.5pa a share, saying they “significantly undervalued” the fashion retailer. Five months later, and after arduous on-and-off talks with various parties, the directors are moving to 110p and saying “fair value” has been achieved for shareholders by submitting a bid from US firm Authentic Brands. As a piece of the bargain, it’s shocking. It can also be a pragmatic concession. If half the shareholder base, including founder Ray Kelvin with his 11.5% stake, wants to take the cash, the board is in no position to resist. Plus there’s the small matter of the “uncertain economic environment,” as chairwoman Helena Feltham put it. Yes, the consumer weather has gotten worse since March. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Still, a £211m bid from a US dealer is a weak way to bow. Ted Baker has never been a powerhouse retailer, but, in its day, Kelvin carved out an interesting niche in the market. Profit warnings, accounting tangles and the “forced hug” case that forced his exit in 2019 obviously changed the picture, and then Covid arrived. But a recovery of sorts seemed to be underway. One can only assume that the big shareholders, led by Toscafund and Schroders, are terrified of the potential impact of these financial uncertainties. They may be right to be so.
Another net gain for the US?
Goodbye Darktrace, then? We hardly knew you, let alone understood how these cybersecurity tools work. Well, the takeover approach by US private equity firm Thoma Bravo isn’t an official offer yet, so it’s too early to say that Darktrace’s 15 months as a London-listed company is coming to an end. But the 24% jump in the share price says the market is betting the way. At 515p, valuing it at £3.4bn, the share price has doubled since it was launched. On the other hand, it peaked at almost £10, which shows how difficult it is to value high-growth, loss-making companies in sectors such as cyber security. The other complication, of course, is Darktrace’s ties to shareholder and early backer Mike Lynch, the Autonomy founder who is fighting the US release on fraud charges, which he denies. The company’s introduction to London seemed to be driven in part by a desire to demonstrate its independence from Lynch, but it never fully achieved this goal. As a multiple of revenue, Darktrace’s valuation lags foreign peers. Therein lies a potential opportunity for a bidder to take advantage of a clean break. Assuming, that is, that UK ministers don’t put a few hurdles in the way of yet another US tech takeover. One assumes they won’t, but it’s not impossible.
