A report released by the Institute for Family Business states that only 30per cent of family controlled businesses in UK are being run by the same family, while remaining businesses have given up their control to the outside interests in the last ten years.
The institute had conducted research across UK, Germany, Italy and France studying 4,000 companies. The research revealed that 42 per cent of the family run businesses were taken over and remaining 28 per cent resorted to diluting hereditary shareholding.
Of the 4.5 million companies in UK, 65 per cent account for family firms, 40 per cent for private sector and 30 per cent for GDP. Julian Franks, one of the authors of report, stated stock market and active markets are the important players, which drive the change in ownership structure in UK.
Grant Gordon, director general of the Institute for Family Business, stated since the family firms are feeding through to the stock exchange, the UK government should make them flourish by creating regulatory and commercial environment, which would further encourage growth of new family businesses.
The board of the leading nuclear generator, British Energy, is likely to recommend a takeover bid worth £10bn by French giant EDF just within a fortnight.
Earlier, Suez, the French utility company, had weaned away from bidding. Suez, which had initially shown keen interest in the takeover, is now attempting a merger with Gaz de France, the state-owned gas supplier. Merger with Gaz de France is the top priority for Suez. It cannot re-enter the bidding fray as per the rules laid down by the Takeover Panel.
The nuclear business has become more lucrative owing to active support from the Government, which is desperately trying to avert energy crisis UK is likely to face. In all ten companies are bidding for the British Energy take over.
France’s EDF has emerged as the frontrunner the takeover. The offer includes buying of 35% holdings of the British Government. Centrica, the owner of British Gas is another contender for the take over. This has made the take over competition more complex.
British energy has eight nuclear power stations with 6,000 strong staff. It generates one-sixth of the UK’s electricity.
Many Conservatives and PM Gordon Brown have been assuring companies of bringing corporation tax further down, but are finding it difficult to sell the idea to the voters at large. The rising corporate profits are making it difficult to convince public why the companies need extra relief. Philip Hammond, Conservative Treasury spokesman, recently commented: “It is quite challenging to argue in the favour of reduction.” Brendan Barber, TUC general secretary, opposed reduction saying that it would only burden the smaller companies and other taxpayers to foot bigger tax bills.
A recent report by CBI taskforce pointed out that large cuts were essential for enhancing competitiveness. It suggested the cost of a cut could be compensated by attracting more investment to Britain. The proposition is easier in case of smaller countries, which can attract enough foreign investment, but would be very difficult for a country as big as UK.
Some commentators believe that higher tax rates would not force migration of companies to overseas countries. Those favouring a rate cut are not sure how it will be financed in the short term. Some believe scrapping deductions for interest costs would finance the rate cuts.
The UK pharmaceutical company, GSK, will have to wait for the US approval of its cancer vaccine until 2010. The company has pinned its hopes of phenomenal business growth on the magic Cervarix treatment. It is expecting sales of more than $1bn a year after the introduction of vaccine in the market.
Cervarix vaccine already on sale in north America is posing a tough competition to Merck’s Gardasil vaccine. The analysts are worried that this may lead to delays in the US approval for GSK’s vaccine. GSK has restrained from divulging FDA’s concerns over approval, but market observers believe that the concern is primarily about a chemical that boosts immune response to the vaccine.
GSK has already bagged approval for sale of its Cervarix in 67 countries including Europe. It is quite confident that its long-term efficacy trial data of those vaccinated over past 4 years will substantiate its claim for US approval. Barbara Howe, GSK’s vice- president and director for North American vaccine development, informed that the company is continuing its positive discussion with FDA and is confident about the vaccine’s safety and efficacy.
BVT Surface Fleet, a two year old shipbuilding company, is combining operations of BAE Systems and VT Group to form a joint venture. It is part of an industry alliance to build two aircraft carriers for the Royal Navy. Government will be placing £4bn order for the carriers. Ministry of Defence under a partnership agreement has guaranteed maintenance of technical capabilities and job security for a period of 15 years.
According to CEO Alan Johnson, BVT will develop new international alliances and expand business through export opportunities so as to reduce its dependence on single customer. He is targeting exponential growth in BVT business in the next five years.
Acknowledging huge importance of carriers in company’s business, Alan Johnson stressed upon the need to build for future, develop capabilities and new markets. Under the terms of the joint venture, BAE will have 55 per cent stake in BVT and the rest will be held VT. VT will be able to exercise option of selling its stake to BAE within three years for minimum £380m.