Finance: Hostile Takeover Bids

Lord Borrie Excerpts

Tuesday 26th April 2011 Lords Chamber

Asked By

[Lord Borrie]

To ask Her Majesty’s Government what is their policy towards hostile takeover bids by foreign interests of United Kingdom companies of national or strategic significance.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, the United Kingdom has a tradition of welcoming long-term foreign investment that can bring in new technologies and skills. Ownership of companies is a commercial matter for the companies concerned. Where mergers may affect the public interest, powers exist to protect issues such as our national security.

[Lord Borrie]

My Lords, so far as it goes, that is a fine Answer and I entirely agree with it. I suggest, however, and I hope that the Minister agrees with me, that some takeovers from abroad may have serious adverse consequences for the consumer interest, for the workforce or for both, and that some takeovers come from countries that do not themselves allow the process of a takeover bid in the reverse direction—in other words, there is no reciprocity. Does the Minister agree that there are provisions in the Enterprise Act 2002 that enable the Government, in the case of concerns of national strategic importance, to intervene? I think that the phrase is that “an intervention notice” may be submitted. If that is not satisfactory, the Act provides for statutory orders to be made to the same effect. Has the Minister considered these matters in relation to a Bill that she knows a great deal about, the Postal Services Bill, under which Royal Mail shares will be made publicly available and might, unless something is done about it, be purchased for a foreign entity?

[Baroness Wilcox]

The noble Lord will know that the Postal Services Bill is still in this House. While no decision has been taken on the formal method of sale, we would certainly not rule out the sale of shares in Royal Mail to foreign-based companies. The noble Lord, Lord Borrie, knows from his experience as director-general of the Office of Fair Trading that we have methods in place to make sure that any bids we look at will be right and proper for the safe concern of the future. The Government’s objective, as noble Lords know, is to secure the future of the universal postal service and to maximise value for the taxpayer. You can be assured that this Government will do what is best for Britain.