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Takeovers and the Public Interest

Takeovers and the Public Interest

Aeron Davis, David Offenbach, Richard Stevens & Nick Grant

04 July 2013


Responsible capitalism in practice

Restoring the link between growth and gain is crucial territory for centre-left parties pursuing new models of progressive governance in the post-crisis era. For the last three decades annual percentage rises in executive pay for large FTSE companies in the UK have grown at a rate far outstripping those of both company growth and productivity rates while at the same time real wages have fallen for the majority of low and middle income earners.
One driver of this trend is that financial activity including takeover activity, has become increasingly short-termist in nature. UK takeovers are more common, more likely to be hostile, and more likely to succeed than in any other major economy in the world. Evidence suggests that a significant proportion of takeover activity is neither beneficial to the creation of long-term shareholder value, the industrial base, the national economy nor society as a whole.
Contrasting the levels and nature of takeovers in the UK with other economies, this paper argues, therefore, that a more progressive approach to corporate regulation needs to look at how takeovers operate. Misaligned takeover regimes can unbalance an economy by encouraging financial gains at the cost of industrial and social losses. It is recommended that current institutions and regulatory regimes are not adequate and that a broader public interest test for certain takeovers should be reintroduced and applied through a new independent body and test.
About the authors:
Aeron Davis
is professor and head of political communication in the Department of Media and Communications, Goldsmiths, University of London.
David Offenbach is the chair of the Labour Finance and Industry Group.
Richard Stevens is a solicitor who trained and qualified into the corporate team at a major city firm and has worked on merger control matters with the OFT.
Nick Grant is a barrister and head of legal services at Sainsbury’s Supermarkets.

Published in partnership with the Labour Finance and Industry Group (LFIG).

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