COMICAL ALI, whose spinning efforts on behalf of the deposed Iraqi government surely qualify him for some sort of public relations award, albeit posthumously, has plenty of counterparts in the corporate sector. What, for instance, are we supposed to make of the shambolic spinning festival that followed our report last week concerning the impending sale of Aer Lingus? Our front page story stated, in bald terms, that “Aer Lingus management was preparing to begin talks” in an attempt to establish a consortium to buy the national airline.
It went on to claim that Tom Mulcahy, the former AIB boss who chairs the airline, had held informal talks with Seamus Brennan, the transport minister, and that a formal proposal would be made within six months. The story, needless to say, was 100% accurate. But these are nervous times at the state airline, so much so that any talk of management getting its hands on this potentially valuable asset must be downplayed.
Lapping up disinformation like rookie reporters embedded with the US Marines, the Irish Times sent its forces out to destroy the story. “No plans to seek Aer Lingus buyer during aviation downturn” it countered three days later. The paper carried a quote from a spokesman for Brennan who was reported to have said it would not “make sense” to search for potential buyers in the current environment.
The paper eagerly pointed out that Mulcahy himself had recently said it was “the wrong time” to search for buyers and then, delivering the coup de grace, reported that Aer Lingus “denied weekend reports” that Mulcahy and Aer Lingus chief executive Willie Walsh are about to start a six-month-long search for potential buyers or partners. “A spokesman said no such process was being considered and the matter had not been discussed with Mr Brennan.”
Of course, we never mentioned Walsh but, fortunately, did not have to stir our ageing body to knock down this nonsense because last Thursday’s Irish Independent stepped up to the plate and smashed the previous day’s feeble effort to play down the story clean out of the park. “Green light for Aer Lingus sale” it declared, revealing that Brennan had given the go-ahead to sell the airline in a trade sale last Tuesday. Indeed, the minister had presented a memo to his cabinet colleagues confirming he would seek “private sector investment” for the airline. Seems the Irish Times got its wires crossed when attempting to decipher the minister’s intentions. Not only that, it has accepted at face value the Aer Lingus claim that Mulcahy has not started down the buyout route. That’s the downside of being embedded with the forces of spin.
Not ready to mix
It has been five long years since shareholders in Readymix got a sniff of €1.90 a share, and it may be another five years if the directors of the company have their way. With 62.6% of the equity held by RMC, its UK-based parent company, Readymix’s minority shareholders now know what it means to be “locked in”. Kilsaran Concrete would like to “liberate” those investors who have seen the value of their holding fall by nearly 30% since 1998.
Last month it approached Readymix and indicated that it was willing to pay €1.75 a share for the business. Readymix promptly told the interlopers to sling their hook or, in the parlance of the markets, “the opportunistic and unsolicited approach from Kilsaran is rejected on the basis that it significantly undervalues the worth and potential of Readymix”.
Opportunistic? Ten days before the first tentative approach, Readymix was valued at €130m. When Kilsaran revealed its hand — a move forced on it when the share price started to move — the business was valued at €182. That additional ¤52m is not a vote of confidence in the Readymix management. Unperturbed, Kilsaran returned to the fray, indicating that it was prepared to increase its offer to €1.90. Hallelujah! The promised land was surely in sight.
Sadly, the minority shareholders had not allowed for the sheer obstinacy of Readymix’s management. Twice denied, Kilsaran has retreated, stating that it has no further interest in Readymix.
Elan still needs saviour
We wouldn’t be human if we didn’t feel some sympathy for Elan’s besieged management team. The latest bad news to hit the company concerns criticism of its Antegren “wonder drug”. The negative claims surrounding the product are contained in a letter to the New England Journal of Medicine by two Glasgow University researchers. The duo, who have been working on the drug which is being developed to treat multiple sclerosis (MS) and Crohn’s disease, claim that the drug may not have long-lasting effects. They have been involved in some of the first tests on humans to gauge how effective Antegren is against multiple sclerosis. The two researchers, Abhijit Chaudhuri and Peter Behan, carried out a 12-week trial on 72 patients. If their claim that it only has a temporary effect is borne out, the drug may be no better than existing treatments. Elan and its partner, Biogen, have plans to file for Federal Drug Administration approval to use the drug to treat MS in late 2004 or early 2005. Elan’s reaction to the claim is that the result is not surprising, given the short length of the study and the small number of patients used. Still, the development merely adds to the company’s difficulties. It was serious questions surrounding the efficacy of Elan’s Alzheimer’s research last year that caused the stock to plummet to a mere fraction of the $60-plus it once attained. An investigation by the American Securities and Exchange Commission into the firm’s accounting practices (the results of which are still awaited) led to another sharp fall in the price. More recently, a significant deal, which would have netted the company $850m and transformed the company’s borrowings, has been challenged in the courts. King Pharmaceuticals is claiming that it was not aware of the extent of generic competition for Skelaxin, a drug it was buying from Elan. The latest news is bound to have a negative effect on the stock which fell 3.63% on Wall Street in the aftermath of the letter’s appearance.
Contributors: Frank Fitzgibbon and Des Crowley
