Exits from Gateway
GATEWAY is the supermarket group whose owners have offered to buy each other out, at a premium to the previous share price, as a means of changing the direction of their business, with whose performance they appear to be dissatisfied. As bidders, they hope to make their offer so attractive that the directors of Gateway will be prepared to recommend it. How- ever, as shareholders they were so little impressed as to let their shares trade below the offer price. This most ingenious para- dox is the work of skilled financial en- gineers, many of whom a month ago were debating at the Bank of England whether contested takeovers were bad for industry. The debate, set up by the Association of Corporate Treasurers, went the takeover bidders' way by so large a majority that I felt lonely in voting against them. The bidders, Sir James Goldsmith at their head, argued that takeover bids were the necessary means to get rid of bad manage- ment. I argue that if the owners of a business are unhappy with its manage- ment, but still wait for Sir James to come along and do something about it, they are not doing their job as owners. Gateway's owners have not waited for Sir James. Instead, they prefer to wait for each other.
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