The U.K. opposition Labour Party’s business spokesman will call for tighter rules on takeovers, saying their value is often unclear and that they should be harder to engineer.
“Though estimates vary, few who have looked at this issue systematically put the share of genuine takeover success stories above 50 percent,” Chuka Umunna will tell a business breakfast hosted by the Association of British Insurers in London today. “There is, I believe, a strong case for more grit in the machine. Not necessarily to stop takeovers, but to stop the rush to takeover.”
Umunna will say he wants to look at whether current rules encourage bids supported by “excessive debt,” creating difficulties for the companies later on. He’ll also say the “financial stability” category of takeover, created to allow Lloyds TSB Group Plc’s rescue of HBOS Plc in 2008, should be abolished.
Umunna will cite the acquisition of Cadbury Plc by Kraft Foods Inc. of the U.S. as an example of a takeover that shouldn’t have happened, though he will say he doesn’t believe bids should be evaluated on the basis of where companies have their headquarters.