Wednesday, 1 September 2010

Port of Dover sale could be Cable’s first big test

It is difficult to get involved in the debate over the future of the Port of Dover without sounding like a rabid Europhobe, but I’ll try.

The issue is this. The Port, currently owned by the Government, is to be voluntarily privatised in the near future, with the full support of the current management team. A number of bidders are rumoured, including UK-based Forth Ports, a French Consortium (sacre bleu!) along with a plan for it to be bought by the people of Dover.

Inevitably, much of the media has gone to town on this, ignoring the strategic business implications and instead focusing on the trivia, such as 5 Live insisting on interviewing Dame Vera Lynn yesterday with a certain song in the background (“There’ll be bluebirds over . . . blah , blah, blah” you get the drift).

From a business perspective there are two key issues. Firstly (and this is where I potentially sound like a Europhobe) I can’t help but ask whether the French would agree to us buying Boulogne. I suspect not and it is worth remembering that the Chirac Government declared Danone yoghurt a strategic national asset to block a hostile bid from Nestle many years ago. Yes yoghurt!

Secondly, what if a listed British company buys Dover but is then bid for itself by a foreign company? Does the Government just throw up its hands and declare, “nothing we can do, it’s the market!”.

Post-Kraft, Vince Cable, our Business Secretary, has talked about tightening the takeover rules by lifting the threshold for shareholder approval and potentially even introducing a public interest test. Much of this is controversial and the Institute of Directors in its submission to the Takeover Panel, which is investigating a change in the rules, opposed such a measure.

However, again, it must be remembered that other countries have no qualms in ring-fencing companies from foreign takeover citing the public interest, witness the furor in the US when Dubai Ports tried to take over six port management operations four years ago.

There is one other option, namely that the Government holds a strategic percentage blocking stake post-privatisation. This is of course the route that the French Government has taken with the partial privatisation of EDF Energy.


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