THURSDAY 17th FEBRUARY 2000; Share Price Woes and Cricketing Deals
Various confusing messages appearing on the Intranet about the sharesave scheme, share options, profit sharing shares still in trust and so on. Mind you, the way the share prices are going, none of us will have any need to worry. We are now down below £11, RBS to 750p. There does not seem to be any great enthusiasm in the market for this deal at the moment. RBS shareholders meet on the 28th and at this rate, they may even be considering whether they should proceed.
My record is not good on share options. This is going to be just like Dun & Bradstreet, where I left and cashed in 5 years worth of options for a grand total of £367.82p. I’ve got some NW options at about £10.50- they're the only ones still in the money, but the way it's going, not for much longer.
The real irony is that we are almost back to the £10.50 share value that stimulated the original BoS bid. I wonder if we had accepted that offer immediately (worth £12.50 at the time) we would have actually achieved more shareholder value? Of course, the BoS price might have fallen and hence de-valued the £12.50, but the whole deal might have happened much faster, perhaps before the general collapse in the banking sector.
So we might question whether this entire exercise has been of any real value at all to anybody? Except, of course, the investment bankers, lawyers, PR gurus and consultants who have probably extracted around £500 million through the process. Money spent during these exercises always has an unreal air, as if it wasn't coming out of anyone’s pocket. But it is shareholders’ funds from all three companies involved.
And the end result (apart from thousands of jobs going, with more promised) has been tens of billions of market value gone from the whole sector as investors have realised that any future consolidation will be difficult, expensive and highly risky. A good redundancy pay-off is looking a more and more attractive option; I am feeling deeply cynical about the last few months and the whole bloody process.
There is a tragic story in today's paper. A NatWest assistant branch manager in Southampton killed himself horribly by setting fire to himself in his car. (He was described as "a top executive" in one paper in the usual tabloid-speak. He was the same level as my buyers and probably earned around £25,000, but I suppose "junior manager" doesn't attract the readers' attention.) He had family problems, but the takeover uncertainty is mentioned as a possible contributor to his awful action.
On a happier note, not all the job cuts end in disaster. A senior manager who was working for Jim Mann, managing our relationship with BT, was made redundant, but I agreed to take him into purchasing for a three-month hand-over period before he goes in April. He tells me that he has decided on a real change and has found a job with a charity working on inner city regeneration and "social inclusion" issues. It will be a drop in salary, but with his NW pay off (which is significant as he has 20 years service) he thinks his family can manage. It is something he has always wanted to do, and I think he will be good at it - he is a committed Christian and strikes me as a good man and a very competent manager. So perhaps all of this uncertainty sometimes has unexpected benefits for individuals rather than purely causing stress and pain.
We announce that we are continuing our cricket sponsorship through the NatWest series of international tournaments. This has caused some debate in my team. My manager workign on this, who is a very experienced, sharp and tough manager and negotiator, has been handling the commercial aspects of the deal, and until recently she was not happy with some aspects. She has also become concerned about whether we should be signing at all given the status of the takeover. As far as she knows, no-one has talked to RBS about it to see if they think it is a good idea.
On the other hand, the agreement is "business as usual" for NatWest, and it would be morally dubious to leave the Cricket Board in the lurch at this late stage. She and I discussed it earlier this week; I said I would happily oppose signing it if she was unhappy with the "purchasing" aspects of the deal, but she is now finally content. We cover our fears in terms of the RBS reaction by insisting that both Norman Blackwell and Ron Sandler approve it. Once they do, I don't think it right for us to try and block it. But it will be interesting to see what RBS make of it in a couple of weeks time.
I don’t feel at all well so go home after lunch with a thick head and sore throat. Jim Mann has moved the Redgrave meeting to 4.30 and I don't think I'll survive till then. He is meeting his RBS counterparts this morning for the first time. These are going to be somewhat strange meetings; yes, we are on the same side now, but we are also potentially going to be competing with each other for a limited number of jobs. So, do you really want to swap your best ideas and great strategic insights at this stage? I think not somehow.