It was famed American investor Warren Buffett who once mused: “When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”
Sadly, the internet does not record if the Sage of Omaha went on to opine about what might happen if a management with little to no reputation tackles two businesses with reputations for bad economics. So, in the vacuum, we are merely left to speculate what the great man might think about the proposed merger between struggling bookies Ladbrokes and Coral.
Of course, this has been attempted before, when Ladbrokes’ bid to take over Coral for £363m in 1998 was blocked by the then plain old Peter Mandelson. Apparently, the combination would have “damaged competition” – which, considering Ladbrokes’ efforts to compete with bitter rival William Hill since, now looks like one of the former trade secretary’s better jokes.
Anyway, this week Ladbrokes’ new chief executive, Jim Mullen, is scheduled to give investors an update on strategy, although that “may be rescheduled depending on how discussions progress”. All of which might rather give the game away: is this deal a runner or not?
The Lords gather to hear HSBC whinge
There was a time when it seemed as though there was some sort of parliamentary inquiry into the banking system every week.
You know the sort of thing: chief execs desperately sticking to lines supplied by their PR minders, as they are pressed to apologise for their role in destroying the world; legislators acting tough, but struggling to land too many knockout blows.
Miss it? Probably not, but for those who fancy a touch of nostalgia this week there is (as always) the House of Lords, where the economic affairs committee is taking evidence on ringfencing – aka, placing investment banking so far away from the rest of us that we might not have to stump up again next time they mess things up.
Anyway, that means simultaneous appearances for Jonathan Symonds, UK chairman of HSBC, and George Culmer, finance director of Lloyds Banking Group, and it’s a totally safe bet that they won’t agree. Lloyds doesn’t have an investment bank, so is loving the discomfort ringfencing is causing rivals. HSBC does, and has been whingeing so loudly that City wags have reworked its old slogan, now dubbing it the world’s vocal bank.
Ocado is in profit. What can it deliver next?
It was only six months ago that Tim Steiner stopped working in the not-for-profit sector, when the company he co-founded, Ocado, spent 12 months in the black for the first time in its 15-year history.
So it’s strange that – having booked a slot for the delivery of the group’s interim results (Tuesday, 7am-8am) – the City seems to have lost interest in the firm’s profitability and even Ocado’s deal to run Morrisons’ internet shopping service. Instead, market watchers appear far more interested in Steiner’s words from February.
Back then, he mused: “The development of Ocado Smart Platform, enabled by our IT replatforming and fulfilment solutions, positions us well to take advantage of future opportunities as the demand for online grocery shopping increases internationally” – which, once translated into English, means that the company is after an international deal.
Ocado has begun purring about flogging its “leading IP” (intellectual property), meaning that questions are certain to be asked about progress this week. Will the first deal be announced? Maybe, but that would require a lot of swotting up by Ocado’s spinners, who don’t seem to know if this world-beating IT includes hardware as well as software.
