Skinflint's City Diary
If evera reverse takeover situation should be referred to the Monopolies Commission it is the merger proposal between Sterling Guarantee Trust and Town and City Properties. Briefly, Town and City, who borrowed £97 million to buy Central and District Properties from Keyser Ullman last year and later entered into a lot of forward joint-venture commitments with Sterling Guarantee (including Earls Court and Olympia exhibition .hall redevelopments), are short of cash and are over-geared. Property development is plagued with political risk and tax threats. The sudden direction of institutional funds by edict away from commercial property (a possibility that socialist ministers do not discount) would deal a massive blow at values and probably the only reason that it is not publicly debated just yet is the harm it would do to the battered fringebank sector painfully trying to climb out of trouble.
The merger produces a massive concentration of property within a centralised area and will undoubtedly give rise to the suspicion (to put it no more vigorously) that there will be a restriction on competition. If the Monopolies Commission is worth a candle the matter should be referred to them. In spite of the support that Prudential Assurance are giving to both sides of the deal you may think it worthwhile selling Sterling Guarantee short where there may be room for a bear raid. However powerful forces are at work protecting their interlocking commitments that go well beyond these two companies. There are many who do not want an open discussion but a 'friends only' quiet wedding without Mr Peter Shore, the Secretary of State for Trade, bothering the Monopolies Commission.
John Davies
There is a rumour, and it is impossible not to feel sympathy for Hill Samuel shareholders if there is a lick of truth in it, that John Davies, late Minister of Europe, is rejoining Hill Samuel, the merchant bank that received a much-needed financial transfusion through a rights issue last year. The bad news for Hill Samuel shareholders is that Davies is to get £40,000 a year by way of salary.
Surely this must be a Wild conjecture—perhaps it is £4,000 a year. John Davies has never had a salary of anything like this in his life and whatever experience he gained in Mr Heath's Cabinet cannot be much use in the commercial banking, investment banking and corporate finance department that he is being said to be joining. With the European, commitment under renegotiation it is inexplicable that Sir Kenneth Keith should encourage his return, though Hill Samuel have a tradition of expensive old dug-outs or their board. Sir St John Elstub, now retired from Imperial Metal Industries is to join the senior citizens on the board of this fine old firm.
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