The.Economist.2007-02-10 (966424), страница 30
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There is some irony in the fact that Britain, which is moresceptical about European integration than most, is the most willing to permit foreign takeovers, thuspromoting the integration of the single market on the ground.France and Spain snap up foreign companies, especially British ones, but when anyone tries to do thesame on their home territory their politicians put up the barriers.
Italy likes to buy abroad too but closesthe shutters as soon as the French or Spanish come looking. Germany, since the high-profile hostiletakeover of Mannesmann by Vodafone, is coming round to the idea of foreign takeovers, just so long asthe target is not Volkswagen. Recent hostility to cross-border mergers has attracted much negativecomment. Paradoxically, though, it may be a reaction to the large amount of M&A that has in fact goneon unhindered.With full liberalisation of Europe's energy market looming later this year, electricity and gas companiesare seeking to become stronger before facing more competition.
By contrast, consolidation in bankingand telecoms has been relatively slow. There are plainly too many banks that are too weak and small,but national governments are loth to see foreigners moving in on their banks or their telecomscompanies. Moreover, the French and Italian governments often retain important stakes in privatisedutilities, so the scope for obstruction is vast.The governor of the Bank of Italy resigned in 2005 after being accused of acting improperly to protectItalian banks from takeover approaches by rivals in the Netherlands and Spain. The Italian governmenthas changed the rules about motorway concessions to prevent a friendly merger between Autostrade andAbertis, so that deal is off.
The Spanish government has been doing its best to frustrate the bid forEndesa from Germany's e.ON, trying instead to promote an internal Spanish merger between Endesa andGas Natural, a smaller local energy company.But the most assiduous practitioners of “economic patriotism” are the French, with their list of 11protected sectors designed to discourage predators from even considering a bid. It emerged amidrumours about a bid by Pepsico for Danone, a food group famous for its yogurt products. Again, it tookonly the hint of a bid for the Suez conglomerate from Italy's privatised electricity company, Enel, forDominique de Villepin, France's prime minister, to drop his opposition to a long-planned merger betweenSuez and Gaz de France.
Union opposition has since held up completion of the merger.The gain in SpainThe roof terrace outside the ninth-floor office of Cesar Alierta in the middle of Madrid affords views to thedistant hills outside the city. But the personal vision of Mr Alierta, boss of Telefónica, Spain's leadingmultinational and its biggest telephone company, ranges even further. In the past year he assumed100% ownership of the biggest mobile-phone company in Latin America, Telefónica Moviles, integrating itinto Telefónica. In Europe he has also integrated O2, originally BT's mobile-phone offshoot, whichTelefonica bought in 2005.
In the first nine months of last year his company's net profit was up by 59%.With 196m customers in Europe and Latin America, Telefónica is now the fifth-largest telecoms companyin the world and the leading firm in Europe supplying both fixed and mobile services. Having conqueredLatin America and secured its place in wider Europe, Telefónica last year tried for a bigger role in China,aiming for a 25% stake in PCCW, a Hong Kong telecoms company.
Faced with local opposition, it had tomake do with 8%.But elsewhere Spain seems to be unstoppable. Its main hunting ground has been Britain, where Spanishcompanies have spent more than $55 billion in recent years, according to calculations by ThomsonFinancial, a data provider. The prey have been energy, utility and infrastructure firms. Many Britons nowphone, bank, travel by Tube, fly out of an airport, run a tap or flush the toilet courtesy of Spanishenterprise. The first deal was when a Spanish bank, Banco Santander, which at the time was littleknown, swooped on Britain's sixth-largest bank, Abbey.
The latest deal in the works is the €17.2 billionbid by Iberdrola, a Spanish electricity company, for Scottish Power, a utility that includes nuclear, hydroand wind power in its portfolio.The highest-profile Spanish deal of all, launched last year, was that of Ferrovial, a construction company,for BAA, the company that owned the three main airports serving London—Heathrow, Gatwick andStansted—and six others. Having offered £10.3 billion ($20.2 billion), Ferrovial fought off a counterbidand persisted despite the announcement in mid-battle that the British government's competitioncommission would investigate BAA's monopoly with a view to breaking it up.These airports are widely seen as a goldmine because price control on user charges is lax and theterminals offer huge opportunities for the development of lucrative retail parks.
Spain's Abertis ownsthree other British airports, Luton, Belfast and Cardiff. Back in 2003 Ferrovial had grabbed an earlierstake in Britain's transport infrastructure when it bought a services and project-management company,Amey, which owns two-thirds of the Tube Lines consortium responsible for running the network (not thetrains) on London's Jubilee, Northern and Piccadilly Underground lines.So why is Spain emerging as such a successful predator? It has done well out of generous EuropeanUnion aid since it joined the EU in 1986. Its economy has notched up an impressive average annualgrowth rate of 3.8% over the past ten years when the rest of continental Europe has lagged behind ataround 2.1%. Membership of the euro, says Mr Alierta, has also facilitated cross-border deals.
And thelatest generation of Spanish business leaders has been educated in the ways of Anglo-Saxon capitalismat American universities rather than imbibing vintage mercantilism at some French grande école.There are two further reasons behind Spain's foreign expansion. One is a special law that allowscompanies to offset against tax 30% of the goodwill costs of any foreign corporate purchase. Goodwillmeans the difference between the book value of assets and the actual price paid. This allows Spanishcompanies to outbid others. The second reason is that Spain's resurgence has been narrowly based on aninflationary boom in property, construction and banking.
When that boom busts, the gain in Spain willturn mainly into pain.Spanish capitalism, for all its new-found foreign elan, is still a clannish affair, with banks holding lockingstakes in companies and firms holding cross-shareholdings in each other, which limits the proportion ofshares that float freely. A handful of leading business families—Entrecanales, March, Kaplowski andPerez—call the shots. The intriguing question is whether the new conquistadores have borrowed and paidtoo much, or whether their new portfolio of (largely) British steady earners will save them from the worstwhen Spain itself turns sour.Copyright © 2007 The Economist Newspaper and The Economist Group.
All rights reserved.About sponsorshipIn the steps of AdidasFeb 8th 2007From The Economist print editionHow smaller firms can survive globalisationHoward ReadGLOBALISATION is daunting for many smaller firms that lack thefinancial and human resources to follow their customers as they moveoffshore. At the same time many of them are feeling the effects ofglobalisation in their domestic and export markets. Clusters of smallerfirms in Italy and Germany that were once successful exporters havesuffered as commoditised textiles, footwear and toys from China haveswamped the market.
They offer particularly instructive examples ofhow European firms are adapting to the challenges of a globalisedeconomy.Politicians and economists in western Europe look to small andmedium-sized business to create the jobs that have gone in bigcompanies. As the giants move production offshore, they turn theirdomestic operations into capital-intensive or high-added-value nichebusinesses that do not create many jobs.
Export-minded small andmedium-sized enterprises in Italy and Germany are also graduallytransforming themselves, often with the help of new finance fromprivate-equity investors; but they do not create a lot of jobs either.Many will have to move some of their production offshore. TakeBechstein, a famous piano-maker, whose best instruments are made ina quiet little town called Seifhennersdorf, near the border with the Czech Republic.
But the company haswidened its product range, buying Zimmermann, an East German producer, and now makes pianos toless demanding standards in the Czech Republic, Indonesia and China. In its own way, this smallcompany is doing much the same as giants such as Siemens, Philips or ABB, a Swedish-Swiss electricalgiant. They all keep the production of core parts of their output at their home base, sometimes sendingcomponents for assembly in low-wage countries such as China. A growing number of other companies isnow doing likewise.Herzogenaurach is a town of 25,000 people in northern Bavaria, near Nürnberg, with a river runningthrough its centre beneath a towering baroque castle. This sleepy stopover on the tourist trail hosted theArgentine football team during last summer's World Cup.
It is a handy place for a footballer to be billetedbecause it is home to two of the world's leading sportswear companies, Adidas and Puma.Herzogenaurach is living proof that as jobs drain away to China and other parts of East Asia, small localbusinesses in Europe can also go global. Adidas grew out of a little family business in the 1920s whentwo brothers, Adolf and Rudolf Dassler, started making leather goods in their mother's kitchen.
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