CEO Mike Lynch says UK and US companies should operate on a level playing field in terms of acquisitions
Mike Lynch, chief executive of Autonomy, has defended the takeover of UK companies by US buyers.
Lynch and the rest of Autonomy’s board last week recommended a £7 bn ($11.5 bn) takeover by US technology giant Hewlett-Packard.
The deal reignited the debate about foreign takeovers in the UK, which has been simmering since Kraft took over Cadbury at the beginning of 2010.
Lynch believes, however, that there should be a level playing field: if US companies have tough, anti-takeover defenses in place, it should be harder for them to take over foreign issuers without the same protections.
‘I don’t think there should be special protection but I do think there should be a level playing field. US software companies often have poison pills whereas UK ones don’t,’ said Lynch, according to a report in the Sunday Telegraph.
‘As a matter of principle, I would like to see that any US company that has a poison pill can’t bid as easily for a UK company. If you have that kind of thing then it should work both ways.’
The number of poison pill defenses in force at US companies has fallen considerably over the last 10 years, due to pressure from institutional investors and proxy advisory firms.
But US companies can put them in place at short notice, for example in the recent takeover attempt of the Clorox Company by Carl Ichan. UK companies, on the other hand, are barred from employing a poison pill defense by the Takeover Panel.
Lynch’s comments follow calls in the last few days for the UK government to offer greater protection to UK-based companies against foreign takeovers.
John Denham, shadow business secretary, said the government should look into whether certain strategic industries should be protected, according to the Guardian. He added that when a company becomes a subsidiary of a foreign owner, there will be a temptation to scale it back during tough times.
The debate has brought back memories of Kraft’s takeover of Cadbury, which was highly unpopular in the UK but went through after the US food group upped its offer to a level accepted by Cadbury’s board.
Lynch argues that the takeover of Autonomy is completely different to the takeover of Cadbury, noting that Autonomy’s business cannot be relocated. ‘The mistake in that thinking is a fundamental misunderstanding of technology,’ said Lynch, reports the Telegraph. ‘If I have the type of technology Autonomy does – which is cutting-edge advanced stuff – you can’t move that R&D.
‘The people who sit there doing it are the world experts. They have family here. It is not like a biscuit factory and you buy a custard-cream making machine in Kentucky and then you run it twice as fast. The people saying these things are rather out of touch with how advanced software works.’
