Saturday, April 23, 2022

EU’s legal pursuit of AstraZeneca looks short-sighted

It’s been hard to keep up with the European commission and EU leaders’ changing stances on the Oxford/AstraZeneca coronavirus vaccine. But the ferocity of complaints about delayed deliveries seemed to have lessened in recent weeks. When Angela Merkel, the German chancellor, had her first dose of the product last week, she thanked everyone who was involved in the vaccination campaign.

News that the commission is about to sue AstraZeneca for its failure to deliver promised doses to the bloc takes things back to the bitterness of January. Stephen Donnelly, Ireland’s health minister, spoke in the Irish parliament on Thursday about the company’s “complete failure” to meet contractual agreements and said the country would be joining the legal action.

Pascal Soriot, AstraZeneca’s chief executive, can probably be accused of over-hyping the company’s production abilities since delivery forecasts have been downgraded twice, but, in a contractual dispute, the wording of the contract is the thing that matters. The company’s lawyers will presumably argue, as Soriot has, that the document contained “best effort” clauses and that producing a biological vaccine at never-done-before speed is not easy.

A court will decide if things get that far. The real question is what commission hopes to achieve by pursuing this action (beyond trying to obscure its procurement failures, that is). AstraZeneca still expects to deliver 100m doses to the EU in the first half of this year – and it will do so at cost price. The only semi-guaranteed outcome of legal action is that no big pharmaceutical company will ever again agree to work for no profit during a pandemic. Brussels looks short-sighted and peevish.

No bonus for Foxtons’ chief was the only credible award

In the end, fund managers could not produce a 50% majority against Foxtons’ award of executive bonuses in a year in which the London estate agent accepted £7m of Covid support from the public purse and made a pre-tax loss.

But they did manage a 39% vote against the pay report, which is high by usual pusillanimous standards. And, intriguingly, there was a 33% vote against the reappointment of Alan Giles, the chair of the pay committee. The targeting of an individual is usually a sign that the rebels are properly angry.

They’re right to be, for the reasons argued here on Wednesday. Giles’ committee acknowledged it had discretion to ignore the bonus arithmetic if the formula spat out an obviously silly figure, but they didn’t go far enough. After a year like Foxtons had, no bonus for chief executive Nic Budden – not £389,000 – was the only credible award.

The company said it would reflect on the vote and consult with shareholders. Save time. Giles has lost the support of a third of the shareholders and cannot carry on.

Aggreko takeover in doubt but Liontrust refuses to roar

Most cash bids pitched at a 39% premium to the old share price sail through, especially when they have the full-throated backing of the target’s board. So, amid worries about a post-Brexit and mid-pandemic sell-off of UK plc, it’s nice to see one that may not.

The £2.3bn offer for Aggreko, the Glasgow-based supplier of temporary power generators, is deemed “in the balance” after Liontrust, the company’s 12% shareholder, indicated it would reject an offer from a couple of private equity houses, the UK-based TDR Capital and the US firm I Squared Capital.

That’s certainly what the share price suggests: at 851p, there’s a notable gap to 880p offer price before Monday’s vote. The bidders, note, need a 75% majority, so one big hold-out in a poll where turnout is never 100% can be a deal breaker.

Irritatingly, Liontrust won’t speak, let alone roar, about its objections. But, if it strikes a blow against panicky submissions to bids, it deserves a cheer. Yes, a 39% takeover premium usually qualifies as fat; but, if the reference price is a pandemic-afflicted low, scepticism is required.

Never knowingly underpaid?

The John Lewis Partnership was clear last November: Patrick Lewis, the great grandson of the founder, was leaving because he wanted to. “Patrick told me a while ago of his wish to leave the Partnership to seek new opportunities,” said Sharon White, the chairman.

After 26 years of service, Lewis deserved a good knees-up if the pubs had been open at the end of December. But the partnership went a lot further. Lewis got £1.5m, according to the annual report, and the largest portion was compensation for loss of office, which makes little sense if he chose to leave the job.

The partnership offered the magic phrase “mutually agreed terms” as a non-explanation. On the shop floor, bonus-less staff may reflect that some partners are more equal than others.

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