Canada rethinks foreign takeovers

I saw this article on the BBC website today. The Canadian government is to subject foreign takeovers of domestic companies to a "national security test" to protect Canada's national interest. A rash of recent takeovers - to get hold of Canada's natural resources - and concerns over the potential for market distortion by state-owned foreign enterprises were behind the move.

As Canada's Industry Minister said - Canada is open for business but it is not for sale. British government please take note.

Hill-Wood says "We do not want Usmanov here"

Well, I think that pretty much sums it up. Read the Guardian article here.

More on Usmanov

The murk deepens on Mr Usmanov - the Russian/Uzbeki who is trying to get his hands on Arsenal football club.

Craig Murray, Britain's former ambassador to Uzbekistan, has accused Mr Usmanov of various crimes (in a most un-ambassadorial way) and of having acquired his fortune in dubious circumstances. Details can be found by typing "Craig Murray censored" to bring up numerous sites that have mirrored the original blog by Craig Murray.

In response Mr Usmanov had his lawyers lean on Fasthosts, the UK company hosting the servers running Craig Murray's website, and they promptly shut down the servers. This caused collateral damage to a number of other entirely unrelated websites including that of Boris Johnson MP and would-be London major. The story has become a cause celebre in the blogosphere and is now beginning to feed into the mainstream media:

The Times

The Guardian

Channel 4 News

Daily Telegraph Online here and another here

Let's hope that this scares Usmanov away. David Dein must be wondering what on earth he has done (one would hope!).

Arsenal - Financial results

Arsenal Holdings Plc, the owners of Arsenal Football Club released their results today. A detailed press release can be found here.

Highlights are:

• Turnover increased to £200.8m - the highest of any English football club.
• Operating profits (before player trading and depreciation) was £51.2m - up from £13.7m.
• Arsenal generating over £3m revenue per game at the Emirates - double that of Highbury.
  
• Arsenal sitting on £73.9m in cash.

The following passage in the release addresses the recent stakes acquired by Kronke and Usmanov and I wholeheartedly support the board's view and their leadership of the club over the last few years:

"Such is the appeal of the Arsenal brand that we now have two new major shareholders.
Their arrival has, unfortunately, brought some degree of speculation about the future of the
Club.

I think it worthwhile, therefore, to once again lay out our philosophy as a Board as to the
guiding principles which underpin our management of the Club. Firstly, I would like to
emphasise our dual role both as fans and custodians of the Club, but to note that we never
allow our support of the Club as fans to put at risk the long term health of Arsenal Football
Club. We believe in being bold in the development of the Club and in taking managed risks;
this is best evidenced by the development of Emirates Stadium. At the same time we
remain committed to the principle of developing the long-term stability of the Club through
maintaining a business that pays its own way. This financial prudence has been a hallmark
of the way in which the Club has been run over many years and has sown the seeds of the
success we enjoy today. We believe it is important to continue this philosophy so that future
generations of Arsenal shareholders and supporters can continue to enjoy the success of
the Club long into the future.

The year saw the departure of vice chairman, David Dein and, once again, I would like to
express our thanks to him for his many years of service."

Usmanov and Abramovitch

In a week when the most successful manager in Chelsea's history is shown the door by his Russian boss, against the wishes of fans and players, Arsenal find themselves facing the spectre of Russian ownership too. I think I hardly need bother spelling out the dangers that being a billionaire's plaything entails as it has plainly been spelt out this week, so let's all hope that the current Arsenal board keep their nerve and can stop Usmanov gaining a blocking vote at the club. It is very frustrating to see the efforts and sacrifices of the last three years being threatened by David Dein and his latest chum.

Dein seems to have really lost the plot in the last few months - we have won the league regularly under Wenger without spending stupid money and are currently top of the league playing great football with a young, improving and exciting squad. Apparently that's not good enough and we need to go down the Abramovitch route and bring in the star names. As Chelsea have found, that isn't necessarily the route to success or good football or large crowds. Have Shevchenko, Ballack and Cashley gone to Chelsea to play great football and to bring success to the club or to feather their nests and build up their pension plans? Who would you rather have in your side Ballack or Fabregas?

Arsenal are absolutely on the right track at the moment and the next set of financial results are supposed to be very good. The current board deserves a great deal of credit for their foresight and for being prepared to sacrifice short term success for long term success. As an Arsenal fan who can remember the relatively barren period through the seventies and eighties until George Graham arrived, I appreciate the need need to build for long term success rather than being one or two season wonders. Our new stadium and the fans filling it every game mean that there is now the strong financial base necessary to keep the club in the frame for the foreseeable future. We don't need a sugar daddy to be successful and unsettle the fundamentals of the club. Or to interfere with a manager who is very successfully managing the team.

Would you want this man running your club?

Barclays , ABN Amo and China

The news that Barclays has turbocharged its bid for ABN Amro with an investment of £10 billion from the Chinese and Singaporean governments should send a warning sign to employees, governments and regulators in the West. Robert Peston in his blog brings together the issues very well.

My view is this. If the Chinese government was just taking a stake, looking for a higher return than on US T bonds, then fine. But we shouldn't be naive; this is lining Barclays up for a takeover. And let's be clear this would not a takeover by a commercial bank with an interest in employees, customers and other stakeholders. This would be a takeover by an arm of the unelected, undemocratic, communist government of China. That, in my view and the view of many others, is unacceptable.

And don't forget, the reason that foreign banks only have stakes in Chinese banks and not outright control, and that applies pretty much across the board in China, is that the state doesn't want foreign ownership of Chinese business. They want to build their own giants and use them to take over our companies and take our technology and jobs.

And while I fully accept that the Chinese people have every right to a more prosperous future, we should be careful that it doesn't damage ours.

Booms were made to go bust

I thought this was a good article on Yahoo Finance. Judging by the response, which is pretty overwhelmingly negative, it's very much a contrarian position but I think the point that the global boom in assets is driven by a credit bubble is pretty inescapable. The question of course is if and when it will burst - or whether it will gradually deflate. We've seen some glimpses of what could happen , back in February, if it does burst - rapid currency fluctuations, crashing stock and commodities markets and general financial mayhem. And it should be noted that gold went down too, as holders sold it off to cover their losses in less liquid areas.

The other side of the equation in this story, the huge current account surpluses of China and petro-countries, also appeared in the news today. The FT reports that the German government is considering setting up an agency to vet acquisitions by state-controlled foreign funds along the lines of the US Committee on Foreign Investment. In my opinion, it is a very sound idea. These acquisitions need to be vetted in all Western countries to ensure that the interests of the acquirers are aligned with consumers and national policy. In particular, I would highlight energy policy and the acquisition of supply companies by energy exporting countries - an area where there is a clear conflict of interest.