LEIGH-PEMBERTON OPPOSES TAKEOVER PROTECTION RULES

  The Bank of England does not favour the
  introduction of rules to shield companies from hostile takeover
  attempts, its governor, Robin Leigh-Pemberton, said.
      Instead, merchant banks advising bidding companies must
  show restraint and responsibility to avoid the excesses that
  have marred recent takeovers, he told the Yorkshire and
  Humberside Regional Confederation of British Industries' annual
  dinner.
      Leigh-Pemberton also called on companies to improve ties
  with institutional investors, suggesting representatives of
  those institutions be granted seats on the boards of directors
  of companies they invest in.
      "Boards cannot expect protection from unwelcome predators,
  for that is but a short step from saying that they should be
  protected from their own shareholders -- who are, after all,
  the proprietors of the company," Leigh-Pemberton said.
      He added takeovers and mergers had an important role to
  play in furthering economies of scale, integration and more
  efficient market penetration. "The degree of success or failure
  (of a takeover) has not in my experience depended on whether or
  not the takeover was contested," he said.
      Leigh-Pemberton noted there had been excesses in takeover
  activity in the recent past. "The aim is to pressurise a
  company's management into action dedicated solely to a
  favourable impact on the share price in the short-term, partly
  or even primarily at the expense of the future," he said.
      Such bids "often depend for their success on creating a
  highly-charged and artificial situation in the share market,
  and give rise to temptations, on both sides of the battle, to
  engage in aggressive, even manipulative tactics that are
  immensely damaging to the interest of the shareholders," he
  said.
      In a clear reference recent events, he said "those in the
  City who act for companies or individuals .. Must, I suggest,
  be ready to accept a full measure of responsibility -- even if
  it entails opprobrium -- for the transactions that may result."
      They "should exercise the most careful judgment at the
  outset with respect to the clients for whom they act and the
  activities contenplated. Those who sow wind cannot expect the
  whirlwind to visit elsewhere," he added.
  

