CITY WHISPERS: Rolls-Royce chief Tufan Erginbilgic’s olive branch fails to woo critic
Strained relations: Rolls-Royce boss Tufan Erginbilgic
When Rolls-Royce boss Tufan Erginbilgic invited one of his firm’s biggest critics – JP Morgan analyst David Perry – to speak to senior staff in January, he may have thought the hatchet would be buried.
Erginbilgic, who joined on January 1, was courting the company’s longtime sceptic as part of an effort to draw up a new strategy for the ailing engine maker.
Perry’s scathing notes to clients have slammed Rolls-Royce’s debt, strategy and performance.
However, the invitation to Perry did little to improve relations. Last week’s note from JP Morgan said: ‘Rolls-Royce’s new chief executive Tufan Erginbilgic recently told his employees that ‘every investment we make, we destroy value’. We are not convinced Mr Erginbilgic can change this.’
There was also criticism for the ‘high turnover’ in its top team after recruits were drafted in from Erginbilgic’s old stomping ground, BP.
Parachuting people in hasn’t won over the sceptics yet.
A bullet dodged
Few can claim a more horrid week than the Confederation of British Industry’s public relations team.
But one City PR was breathing a sigh of relief, telling Whispers they had considered leading its beleaguered communications department.
‘The CBI was hiring a head of press a couple of months back and I almost went for it.
‘The way this is going I’m not sure I would have survived my probation period,’ they said.
A bullet dodged.
Private equity plunderers are officially back in the game
Takeover approaches for Network International, Wood Group, Sureserve, The Hut Group and Dechra Pharmaceuticals are likely to be only the beginning of the next set of deals, City sources agree.
But another trend is also emerging.
Interest rate rises make the debt-heavy buyouts of years gone by less feasible – and word on the street is that private equity firms are now keenly sniffing around the Middle East and other sovereign wealth funds to secure the cash needed for takeovers.
Abu Dhabi is said to be lined up as a co-investor with Dechra’s suitor EQT, with dealmaking sources insisting this type of arrangement is soon to be a regular feature.
Qinetiq in pole position for more dealmaking
Analysts at Barclays believe Qinetiq is in pole position for more dealmaking.
The high-tech defence firm released a bullish update last week in which it said its full-year results would outperform the City’s expectations.
Barclays said it was well positioned for ‘future bolt-on activity’ – in layman’s terms its buoyant trading and healthy amount of cash mean it could scoop up smaller rivals.
Boss Steve Wadey is keen to seal more deals to grow the company – unlike many of its FTSE 250 peers who have fallen prey to bigger bidders and been taken off the stock market.
Always best to be hunter rather than hunted.