Bears stop play
GOODBYE and good riddance to some of that. Goodbye to the paper mills and printing presses churning out new share certificates, so that companies can issue them and exchange them for somebody else's earnings and assets. Goodbye, there- fore, to the share price manipulations of the takeover boom, and goodbye to the boom itself — at least in the form to which we have had to become accustomed. It has depended upon shareholders' and under- writers' willingness to take the new shares at something like their promoters' valua- tion. That must be' over. It was sad but instructive this week to see Matthew Brown the brewer lose its independence to Scottish & Newcastle, after fighting off S&N's two previous bids. What made the difference this time was the cash which S&N offered as an alternative to its paper. Share values had plummeted, but cash was still cash. Can it be that Lord Weinstock, who let GEC sit out the whole bull market and bid fever of the 1980s, steadily piling up cash, will now have his choice of purchases? Goodbye, surely, to the whole game of putting a company into play. In this, as we have seen, the player picks up a pile of shares, and then inflates their price by showing that the company is now open to a bid. It can be seen either as a self-fulfilling prophecy or as a specialised example of the 'bigger fool' theory, by which a fool pays too much for a share in the belief that a bigger fool will pay more for it. Bigger fools are now harder to find.
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