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City & Business: Cooking takeover goose

Patrick Hosking
Saturday 04 June 1994 18:02 EDT
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SPEAKING of hostile takeover bids, Robin Cook wants to put a stop to some of them. The shadow industry spokesman, in his new industrial blueprint, Winning for Britain, published last week, would like to see them blocked unless the predator can prove that its bid is in the public interest.

He has good reason to be suspicious of aggressive takeovers. Few make sense, and they are ruinously costly for both sides, not to mention deeply disruptive to the ordinary running of businesses.

But it would be a mistake to make them any more difficult. They are one of the few ways of dislodging incompetent, greedy or indolent managements. Just the threat of a bid keeps managers on their toes.

In an ideal world, the non-executive directors or the institutional shareholders would do this job. In reality, the non-execs sometimes turn a blind eye and the institutions, ever on the look- out for new pension fund business, do not want to be seen rocking the boat. Mr Cook should think again.

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