Company A buys Company B, using bank borrowing to finance almost 50% of the purchase, which loan it will repay by stripping Company B. Loss of jobs, skills, quite possibly alteration to product quality at some point, quite possibly lower overall profitability for the conglomerate as a result of the takeover (this is, I believe, quite common).
Cui bono? Should there be a rule against financing takeovers with bankster cash?
Where are the shareholders on both sides of the transaction?
ReplyDeleteBoth sides are being ripped off in the deal.
If they won't raise Cain, it is unlikely that legislators here or MP's there will take notice.
All I hear is shareholder value . . . there are some things you cannot put a true value on . . . ethics, morals, values and just doing the right thing. This is a bad deal for nearly everyone involved! I hear talk around me of people not buying cadbury from now on. We'll have to wait and see what happens?
ReplyDeleteHow about setting a maximal percentage of borrowed money, like a mortgage?
ReplyDeleteI've been looking at this whole business of how monopolies operate and this is another aspect of the same question. Paddington might have an initial measure here.
ReplyDeleteJames - thank you. It just seems that most of the very wealthy players, including CEO's, never risk their own money, the way the investors in Lloyds of London do. Perhaps if they did, the system would be more stable.
ReplyDelete...and what collateral was used to secure that debt? Oh the irony.
ReplyDelete