High-street icons are safe in private hands

Those who fear that private-equity bidders, if they secure control, will destroy national icons such as Boots and Sainsbury’s, might consider that J. Sainsbury fared pretty well as a private company for 104 years before it floated on the London Stock Exchange in 1973. Family control with its paternalistic overtones may appear different from highly incentivised professional management backed by private equity, but in both cases the people at the top are motivated by the same goal. To make money for the com-pany is to make money for themselves. Private ownership enables managers to get on with this task without interference from the battalions of busybodies who besiege public companies.

In recent weeks the ‘spectre’ of private-equity takeovers has loomed over a growing number of FTSE-100 names including BT and ICI and even mighty Unilever, as well as Boots and Sainsbury’s. Trade unions have taken up arms; ‘asset-stripping’ has re-entered the vocabulary in a way not heard since Lords Hanson and White provoked such ire — as well as investor joy — in the 1980s by snapping up totemic companies such as London Brick and Imperial Tobacco. The Hanson duo’s activities inspired a band of followers — among them the acquisitive Williams Holdings, built up by Brian McGowan and one Nigel Rudd, now Sir Nigel and chairman of Alliance-Boots. True, private-equity firms offer honey hugs rather than bear hugs to their target companies, because they need a close look at their books before they bid. Even so they can stir up a good deal of unrest.

As in the 1980s, there is a general unease that a rapacious force for corporate evil is stalking the land. Hysteria has been whipped up mainly by the GMB trade union which, as private-equity-owned companies now employ a fifth of the British workforce, is only doing its job.