Cable slams fat fees earned in Cadbury-style deals

VINCE Cable has taken a major swipe at the professional services community in the wake of Cadbury-style deals which “destroy value” to the UK economy.

The Business Secretary said too many of the deals were driven by the “fat fees” earned by lawyers and bankers instead of what was in the UK interest.

In a speech to the GMB congress in Brighton, Mr Cable said: “We are seeing too many company takeovers which reduce or destroy value and are driven by the fat fees earned by the lawyers and banks who facilitate them.

“I have made it clear – post Cadbury – that there have to be changes and I am pleased to see the Takeover Panel has come up with modest but useful changes to reduce unnecessary takeovers.”

The panel, ruling in the wake of Kraft’s £11.5bn acquisition of Cadbury last year, said firms should have more power to protect themselves from hostile takeovers.

It said that to prevent a reoccurrence of the Cadbury situation, in future bidders should reveal their financing plans and their intentions for the company and staff post acquisition.

However, it stopped short of proposing radical measures such as raising the acceptance threshold for a successful bid above the current 50% level and disenfranching shares obtained during the offer period.

Mr Cable has also criticised levels of executive pay and the continuing bonus culture.
Speaking of the need to rebalance the economy, he said: “Top pay has escalated to ridiculous levels, particularly in the banking system but also more generally.

“High levels of pay and the underlying differentials within companies often are unrelated to management performance. Rewards for failure abound. And the inflated salaries and bonuses are in turn translated into top pay in the public sector.”

He said he was now looking at practical measures to address this issue and added there was a need for “more transparency; more effective control by shareholders over remuneration” and “tighter regulation of bonuses in financial services”.