| Published on 09-05-2007 In General |
| Viewed 2540 times | Written by T. S. V. Hari |
| The takes against takeovers |
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I have been noticing the tirade being carried out by Dr Ramadoss against major commercial undertakings turning undertakers of small businesses in recent times and developed some sort of admiration for the PMK though I don't agree with most of its political policies.
This bit of misplaced sympathy is due to the mad mantra in the financial world today – takeover – be it the USA, Europe or Australia.
The fever began sometime last year when Mittal swallowed the biggest steel maker in Europe . Then came the Tata effort doing the same thing in that part of the world.
It is quite another story that the deals triggered a minor collapse of the two companies' share prices – but the bosses of these two enterprises had dealt themselves four aces.
I read with interest a little later (early this year) when a set of fiscal double-dealers advised two suitors bidding for the same newspaper in USA. It did not matter to them that that one of the raiders ended up with egg all over the face, but the moneybags crawled out of the heap smelling like roses.
Quite a few senior American business journalists discovered a new virtue in this caper, even coined a term for the effort and called it "staple-financing" regardless of the fact that it was fairly obvious that it was plain cheating.
Soon, there was another such deal in Australia.
A pack of intercontinental shysters planned a raid on Qantas – an airline that had been in the red for a long time but had begun a recovery. Though the raiders offered a price higher than what was prevailing in the market for Qantas shares, they had planned to rip the company off for almost US$3.75 billion within 2 years.
This was to be done openly and if it had gone ahead the world would have known that the huge sum of money would have been stripped off Qantas' balance sheet for less than nothing.
How?
The bidding consortium was pooling in less seed money through borrowings and was poised to take the airline's assets, pledge them to other banks (along with its wealth in the form of planes, landing and takeoff rights) and clean up the company no matter what happened.
Strangely, the present management of Qantas was in cahoots with the robbers and was bound to be paid close to US$250 million as bonuses!
In short that was one deal that never ought to have succeeded because it stank to high heaven. Finally news is out that the sharks won't get their teeth into the airline.
I only hope that those set of Trojan horses lose their jobs. That will be poetic justice.
An Australian newspaper I subscribe to through the net has predicted that there will be more attempts to buy the airline sometime later expressing its abhorrence for such a possibility with some subtlety.
Bully for them!
Even as all this was going on, there were other deals that caught my eye. Another smart Alec collected yet another family owned newspaper in the USA.
All this gave Rupert Murdoch – the guy who gave up his Australian citizenship and became a naturalized American simply because he wanted to own more companies in the host nation – the itch to bid for Dow Jones.
Now that is something that gives me the heebie-jeebies.
Murdoch's interference with the editorial policy of every newspaper he ends up owning is well known.
The deal to pocket Wall Street Journal and all its allied firms, it looks like for the time being, will be nipped in the bud by their present owners. I hope it does.
Another media deal that will interest journalists the world over is an attempt to gobble the international news agency Reuters by an unnamed company though there are rumours suggesting the hidden hand of a rival company. Nobody knows which way the cookie will crumble as of now. From the look of it, Reuters' management isn't amused.
All this brings up the basic set of questions. Why should a new set of asset-grabbers be allowed to bag a company nurtured by somebody else lovingly for a long time – even when it is making good profits? How are billions of dollars or Euros or whatever put together to do the job on somebody else?
To me, it simply seems like baby-snatching (like those reported in impoverished states of Orissa) and whenever such attempts fail, for some strange reason, I feel elated.
But that doesn't mean that all those arrangements leave the original owners in financially straitened circumstances like the poor in India.
The big guys always collect huge sums and sometimes conspire with newer friends to do the same thing to others.
That reminds me of a local newspaper in Tamil Nadu which changed hands and its former owner was made an MP. With a saturation of advertising, the editions are being touted as the number one in Tamil fourth estate.
No such luck for someone who claims to own a pro-opposition satellite television station's majority shares. There was a scare that the unwilling gentleman (who also exports mineral wealth from south Tamil Nadu) might be flung behind bars for a long time. Those indicators have disappeared from the front pages, but the story is far from over.
So why am I against this bit 'perfectly legal' financial black magic?
Well, the answer to that one is in a continent called Africa and its immediate neighbourhood in the Middle-East. One look at the maps (most countries have borders that run in a straight lines) is enough to know how similar efforts by a set of individuals triggered colonialism. After their natural wealth was plundered (it is still being done under a different garb) they were left to fight against their neighbours resulting in genocides and acute poverty.
Now, instead of armies subjugating a whole set of economies, similar acts are carried out with the use of cheque books.
This still doesn't mean that the time-tested method of sending unpopular armies won't work. Take one look at Afghanistan and Iraq and you will know what I mean.
That brings me back to Dr Ramadoss, the original premise of this rambling set of thoughts about takeovers. He obviously turned a new leaf after his party's attempt to privatise JIPMER ended abruptly amid stiff opposition. Now the good man has turned his anger against all those who are doing the same thing in Tamil Nadu – at a smaller, commercial level to kill small time traders.
Who says something good will not emerge from an embittered person? |
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