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THE SUNDAY TIMES (UK): Agenda: William Lewis: HAPPY NEW YEAR. And what a year it is going to be. I can barely wait for the markets to open. My predictions for where the action will be: “…the Shell oil group will successfully complete its internal merger, and Unilever will follow suit with its own plans to end its dual structure.” ( 2 Jan 05



January 02, 2005  


HAPPY NEW YEAR. And what a year it is going to be. I can barely wait for the markets to open.


Many of last year’s themes and stories will continue to dominate — security, the rise of the Chinese economy and Chinese companies, outsourcing to India, worries about the price of oil, the dollar and raw materials, pension and housing-market concerns, and the march of private capital (hedge funds, private equity). But we will also be treated to a spate of takeovers, mergers, oustings of chief executives, and cracking criminal trials.


But before I give details, let me show a bit of form. I attempted the same thing a year ago, so how did I do? The answer is not too badly: I scored 7.5 out of 13.


Among my embarrassing howlers were America’s Home Depot buying Kingfisher (completely wrong) and Nick Ritblat taking over as chief executive at British Land (Abbey’s Stephen Hester got the job).


But I had some notable successes — Sir Peter Davis gave up the fight at J Sainsbury, and the FTSE 100 index did finish up almost 8% at 4,835 (the actual figure was 4,814, but that means I was only 21 points off).


The following will take place in the next 12 months.


Bosses who will move on


Rod Eddington will announce he is stepping down as chief executive of British Airways. Most of the candidates will be internal, but chairman Martin Broughton will also take a close look outside the company.


One man he will want to talk to is Willie Walsh, who turned round the Irish airline Aer Lingus.


Also, Sir Roy Gardner will begin to think about calling it a day as the chief executive of Centrica. He is already the chairman of Manchester United, and a FTSE 100 chairmanship surely beckons. 


Bosses who will hang on to their jobs


For Marjorie Scardino, chief executive of education-to-media conglomerate Pearson, 2005 is delivery time. In recent years she has asked investors to be patient and stick with her strategy. Meanwhile, the company’s share price has dipped below where it was when she started. Scardino is confident that this year will be a good one for Pearson, and I am betting she will pull it off. Just.


Another man under pressure is Jonathan Bloomer, chief executive of Prudential. A bungled acquisition in America, the failure to sell its online bank Egg and a surprise rights issue have all angered investors. He cannot afford any more upsets but, as the business powers ahead in Asia, he should be safe.


Sir Tom McKillop, chief executive of Astra Zeneca, should also see his way through to retirement, despite the storm engulfing the drugs industry. JP Garnier at Glaxo Smith Kline will start to produce the evidence to convince investors that it can still develop new medicines. 


Two for whom it is too late


Unfortunately for Jamie Oliver, the youthful face of J Sainsbury on television, his future involvement with the supermarket group will come to an end.


Time has also run out for William Morrison’s finance director, Martin Ackroyd. Investors have spent most of the past year worrying about the group’s integration of Safeway stores, and rightly so. It has been a disaster. My betting is that the recently appointed non-executive directors will demand that he be moved on. 


One to watch


We should expect fireworks from United Business Media’s new chief executive David Levin. He will sell UBM’s 35% stake in Five, the television channel, and there are other bits of the business (the NOP polling unit, for example) to sell once Lord Hollick has departed. 


Deals likely to be attempted


As you can see from the table [not reproduced online], there are 12 likely takeover targets to keep an eye on. Some are obvious (SSL), but Barclays is less so. The executive team there believes the bank will stay independent, but I think the Bank of America won’t be able to stop itself from having another go at wooing Barclays’ chairman, Matt Barrett.


In addition to those 12 hot tips, the Shell oil group will successfully complete its internal merger, and Unilever will follow suit with its own plans to end its dual structure.


NTL and Telewest, the two cable groups, will finally be brought together in a deal engineered by that mysterious American investor Bill Huff. The London Stock Exchange will be owned by either Euronext or Deutsche Börse, and J Sainsbury will receive a management buy-in approach from Allan Leighton and his chum Archie Norman.


Stockbroker Singer & Friedlander will be bought by the Icelandic bank Kaupthing, steel company Corus will merge with another steel company (most likely Thyssen Krupp) and Sir Richard Branson’s Virgin will finally complete its airline deal in America. Virgin-BritishMidland will also be back on the agenda.


The fund manager Amvescap will be broken up, either by existing management, or by an outside takeover.


Invesco-Perpetual, its British arm, will try to spin off from the contaminated American company.


GUS, the Argos to Homebase conglomerate, will also split itself up, and Dixons will sell off the Dixons stores.


Centrica and BG will think about re-uniting. BAE will continue its acquisition push into America. And an increasingly confident and ambitious UTC will try to buy Rolls-Royce.


The telecoms equipment group Marconi will tie up a partnership overseas, and Andrew Regan, the entrpreneur best known for his aborted bid for the Co-op, will return with a high-profile bid for a FTSE 250 company through AIM-listed investment vehicle Corvus Capital.


Finally, there will not be any proper takeover bids for either Manchester United, or Marks & Spencer. 




Tony Blair’s Labour party will be re-elected with a majority of more than 100 seats. But fewer than 50% of people eligible to vote will bother to do so. 


Prison time


Bernard Ebbers, former WorldCom boss, will end up in jail. But I predict yet more delays in the trial of Enron’s top two, Ken Lay and Jeff Skilling. 




Despite the deal activity, it will be a tough year for the stock market, with the FTSE 100 finishing the year up just 200 points, or 4%, at 5,014.


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