A whiff of crackling
SOMEONE in the Stock Exchange's slabby tower must remember what happened when the Peninsular and Oriental Steam Naviga- tion Company bid for Bovis the builders. P & 0 had run out of steam and was navigat- ing in circles, Bovis's management was much hyped or much admired, sleek merchant bankers tried to put the two together. Bovis's shareholders lapped up the deal, P & O's resisted it. Stickers spread across the City: 'Save P & 0 — tell Bovis No!' In the end, P & O's shareholders threw the deal out and Bovis proved to have needed it more. The lesson was and is that to buy a company for its management is like burning down a house to roast a pig. Managers, however expensive, are cheaper than companies. The Exchange's attempt to merge with its oppo- site number in Frankfurt conjures up a whiff of crackling from those distant days. It was short of steam and weak on navigation, those purposeful Germans seemed to have these problems cracked, so putting the two exchanges together seemed to be one way to solve them. Now the deal has run into resis- tance. What suits the Exchange's directors and managers may not suit its customers and owners, who, as I thought they would be, are reluctant to settle for the sticky end of a fudged merger. They fmd it hard to believe that London and Frankfurt could make a union of equals, and they can see that the voting power, as well as the managerial force, would be concentrated at the other end. If the resistance movement spreads stickers all over the tower, that can only be an improvement.
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