Shareholders and the spineless board at Morrisons only have to look at the fortunes of Astrazeneca since 2014 to understand why rejecting financially driven overseas suitors is the right course.
Astrazeneca (AZ) has soared up the FTSE 100 to become Britain’s most valuable company, with a stock market value of £128billion.
But it also single-handedly demonstrates that big pharma can have a public conscience too.
Reward: Astrazeneca, led by Pascal Soriot, has soared up the FTSE 100 to become Britain’s most valuable company, with a stock market value of £128billion
On the same day that a smaller private-equity-owned pharma group, Advanz, has been publicly humiliated and fined by the Competition & Markets Authority over price gouging, AZ revealed that its Oxford vaccine sales tripled to £643m in the second quarter. This is a fraction of the income disclosed by American competitor Pfizer for Covid prevention. AZ has so far managed to distribute almost 1bn doses of its life saving Covid vaccine at cost.
The Americans have played hardball on approvals, and the European Union tied itself in knots over safety and production delays. Even so, AZ has been doing the right thing. It has not only protected the UK but has also shipped vaccines out to middle and lower-income countries. Chief executive Pascal Soriot plans to roll out at least 1billion more doses at a bargain-basement price. Had the AZ board rolled over six years ago, as Morrisons and countless other companies have done in the face of private equity barons and overseas buyers, the company would barely exist today as an independent unit.
AZ is much more than vaccines. It is a leader in the new science of using immunology to treat deadly diseases such as cancer. Its lung cancer treatment Tagrisso has become a $5billion (£3.9billion) blockbuster and AZ is working flat out, with other research organisations, to come up with a blood test which would allow it to detect lung cancer at the earliest stages so that it can effectively be cured. In the first half of the year AZ sales, aided by the vaccine, soared 18 per cent to £11.1billion. Even though profit margins were squeezed, investors are still buying into the AZ story and its promising pipeline enhanced by the integration of US rare disease specialist Alexion. Among potential blockbusters in train are new therapies for leukaemia and kidney disease.
Investors have been rewarded for backing a company under siege. Morrisons and Ultra Electronics, please note.
So many great City names, from Robert Fleming to Warburg and Cazenove, have sunk below the waves that it is hard to enter into a period of mourning over the sale of wealth manager Charles Stanley to Miami-based upstarts Raymond James.
Stanley has a heritage that can be traced back to 1792, and in an age when clients value good execution of share deals, sound wealth and pensions management and safe custody, it is hard to think that it didn’t have an independent future.
When American marauders armed with big cheque books come along offering a fat premium, it provides an opportunity for the executives to march off with big payouts.
Under the terms of the deal, chairman Sir David Howard will receive £66m for his substantial family stake and he and chief executive Paul Abberley nominally remain at the helm.
Raymond James’s UK chief Peter Moores will be overseeing operations. As we have seen in past deals – including the merger of Standard Life and Aberdeen – such double banking of roles rarely lasts.
There have been a series of deals in the lower ranks of wealth management, so the latest £279m transaction is part of a trend. It is difficult not to argue that in Britain’s leading edge financial sector, overseas ownership has been anything but beneficial, creating jobs and fuelling the coffers of HM Treasury. Losing a historic City player is nevertheless dispiriting.
Diageo is sitting on a war chest after a bumper Covid year which saw American sales power ahead 20.2 per cent on the back of Johnnie Walker and booming tequila brands Casamigos and Don Julio.
Free cash flow jumped in the 12 months to June 30 to £3.7billion from £1.2billion, allowing chief executive Ivan Menezes to step up investment and to splash £72m in assisting the bar trade through the pandemic and lift the dividend.
The big challenge now is to find a suitable bid target in a spirits market where family ownership still dominates.