Takeover Provisions (Hansard, 19 June 1996)

§ 19. Dr. Wright
To ask the President of the Board of Trade what plans he has to alter the takeover provisions affecting UK companies. [32129]

Mr. John M. Taylor
We have no plans to alter the current takeover provisions.

§ Dr. Wright
Does the Minister accept that firms that live in permanent fear of takeover are unlikely to put long-term investment before short-term returns? Does he accept that British firms are peculiarly vulnerable to takeover, especially to foreign takeover, because of the laxity of our takeover rules? Is it not time to revisit the rules by which British firms must live and—too often—die?

Mr. Taylor
On the first point, takeovers play an important part in ensuring that companies are run efficiently, which is in the interests of shareholders and consumers alike. If managers want to retain control of their firms, they must run them as efficiently as possible. As for foreign shareholdings, few countries enjoy more overseas corporate control than the United Kingdom. Inward investment is a two-way street, and it is very welcome.

§ Mr. Salmond
The Minister seems to be telling us that successful companies do not get taken over. Given the profitability, success and strategic importance of the Royal Bank of Scotland to the Scottish economy, does the Minister welcome the fact that the takeover threat to the bank appears to have receded in the past two weeks?

Mr. Taylor
The existing merger control provisions in this country are satisfactory at the statutory level and at the non-statutory level. Each case is examined on its merits. As for a merger of a particular bank in Scotland, that is a commercial decision for the parties. The necessary statutory and non-statutory issues would be brought into being only if competition issues arise subsequently.