Memorandum submitted by Unite the Union
TAKEOVER REFORM[5]
A MERGERS AND
TAKEOVERS COMMISSION
TO ENSURE
THE LONG-TERM
INTEREST OF
THE TARGET
COMPANY
Currently in the UK no one involved in a bid
is required to take account of the long-term interest of the target
company including stakeholders and the wider interest of society.
The outcome of the bid is decided by shareholders alone depending
on the price of shares. Whilst shareholders want the highest price
for shares, this can be directly against the company's interestparticularly
if it means being saddled with more debt.
A Takeover Commission would assess whether the
bid is likely to enhanceor indeed damagethe target
company's economic and productive capacity in the long-term. Assessment
could include for example impact on investment, employment, R&D,
training, the economic case for the bid, comparisons of financial
projections, and levels of debt and repayment schedules.
PROTECTION OF
WORKERS' ECONOMIC
INTERESTS IN
THE CONTEXT
OF A
BID
Currently there is no obligation to consult
and the protection of workers terms and conditions afforded by
TUPE does not apply. Thus we need:
an extension of TUPE[6]
protections to cover mergers and takeovers by share transfer;
and
information and consultation must include
full disclosure of business plans and all other relevant information
pertaining to the bid and meaningful consultation on potential
impact on employees.
Because a company may hide behind the Takeover
Code we need:
the right for workers' representatives
to negotiate protection of investment, jobs and terms and conditions.
Currently others can act to protect their interests
from added risk of debt eg banks charging higher interest rates,
pension fundsbut not workers.
REFORM OF
SHAREHOLDER RIGHTS
Reform of shareholder rights are needed so that
only long-term shareholders who have owned shares for a year at
the time that the bid is announced are able to vote on a takeover.
Short-term share traders who buy shares solely to profit from
a takeover process should not have a say. Lord Mandelson's recent
speech is a step in the right direction as, of course, directors
should be "stewards rather than just auctioneers". A
takeover bid should require at least a 2/3
majority shareholder agreement at a properly constituted EGM or
AGM. This would also enable institutional investors to be held
to account by their beneficiaries for their position on takeover
bids.
EXAMPLES OF
DIFFERENT APPROACHES
TO TAKEOVERS
ELSEWHERE
Germany
Driven by concerns about predatory bids, in early
2009 Germany introduced new rules which can limit foreign ownership
to a 25% stake. In addition Germany also has co-determination
whereby management are appointed and supervised by a Supervisory
Board which may consist of one third employee representatives.
Holland and Belgium
Under law, companies can have articles of association
that make it more difficult for a predatory bid.
France
In 2005, following concerns about a PepsiCo takeover
of Danone, the French Government introduced a law requiring that
an acquisition in a strategic sector is subject to prior approval
by the Finance Minister. Other measures make a company less vulnerable
to a hostile bid, for example, double voting rights for long term
shareholders.
WHAT UNITE
WANTS FROM
KRAFT:
Investment in the world-class Cadbury
business.
An urgent meeting at the highest level
of Kraft management with CEO, Irene Rosenfeld with full disclosure
of their business plan for each site in the UK and Ireland.
Full explanation of why they made the
statement they did about the future of Somerdale and misled the
workersand the publicdespite being repeatedly urged
not to do so from September 2009 because of the closure plans
being so far advanced.
Guarantees for the future of all UK and
Ireland sites, including:
No site closures in UK and Ireland for
five years.
A guarantee of no compulsory redundancies
in the UK and Ireland for five years.
A guarantee of no erosion of terms and
conditions for five years.
A guarantee of no diminution to pension
benefits or increase in contributions for five years and a commitment
that the company will fund any pension deficit.
Full disclosure of all business and investment
plans for each site and product category.
Unite believes that these are all reasonable
expectations of a company of the size and resources of Kraft and
would demonstrate a commitment to the former Cadbury workforce
as well as providing reassurance for those workers that they won't
pay for the takeover with their jobs and conditions.
16 March 2010
5 This draws on TUC work on Takeovers and mergers. Back
6
TUPE requires information and consultation of the employees' representatives
on the potential implications of the takeover to terms and conditions
of employment; protection of employees' existing terms and conditions
of employment the new employer can only vary them in limited circumstances;
dismissals due solely or principally to the transfer will automatically
be unfair unless the employer can show there was an economic,
technical or organisational reason for the dismissal. Back
|