Two years before the financial crisis and a decade before Brexit, 2006 was a different time. When an apparatchik at Gazprom said an acquisition of Centrica was “being analysed and examined” by the Russian state energy giant — sending the British Gas owner’s shares 25% higher — Tony Blair’s government indicated that it would not stand in the way. With a glibness redolent of the era, then trade and industry secretary Alan Johnson remarked: “Whatever the difficulties and challenges of globalisation, the answers will not be found in the stagnant waters of protectionism.” Come on over, comrades. A takeover of Britain’s former energy monopoly by the Russians or Chinese would be unthinkable today — but would a takeover in itself be out of the question? With Centrica’s shares trading at 92.8p, a price also reminiscent of another era (they last sunk to that level in the late 1990s), City scuttlebutt suggests at least one overseas rival is eyeing the FTSE 100 stalwart with a view to gaining a foothold in the British market. Iain Conn, chief executive since 2015, has had a dreadful ride. He cut the dividend by 30% after arriving — and the shares, with their yield of 13%, are screaming out for another. Centrica lost 742,000 household customers to cheaper rivals last year, and there is the existential danger that at some point Amazon or Google will decide they want to “own” every part of their customers’ spending. What kind of suitor would want to endure the political turmoil a takeover bid would cause just to seize that dubious prize? Even Vladimir Putin would think twice about spending more than £5bn with the prospect of Jeremy Corbyn and John McDonnell taking charge. And yet for a long-term, strategic buyer, Centrica could provide a route into Britain and a well-known brand. Its chief executive is weak and its chairman is new (Charles Berry took over in February). Don’t rule it out.
Times 26th May 2019 read more »