SHAREHOLDER VALUE IS NO LONGER THE ONLY CONSIDERATION
In a financial landscape radically altered by the credit crunch, shareholder value is no longer the only consideration. Now the media are asking a different sort of questions, says Ruth Sunderland, editor of Observer Business & Media:
Back in the day, the financial press could make or break a takeover bid – but is that still true in an era of social media?
In the golden age of M&A, back in the 1990s, journalists lapped up details such as Rocco Forte being caught unawares on a grouse moor in Yorkshire when Gerry Robinson of Granada launched his successful takeover for the Forte leisure group; or the revelation that the Hanson group owned some of top executive Lord White’s race horses, a fact used to discredit its failed bid for ICI. It was great knockabout stuff, full of larger than life personalities: the bids were buccaneering - and so was the PR.
Business writers love takeovers, but we’ve been deprived of our fix for the past couple of years because of the credit crunch. As the first high-profile M&A the City has seen since the recession, coming at a time when the papers are themselves under assault itself from the new media, the Cadbury bid is an interesting test case for communicators.
It used to be a relatively straightforward game: if you had won over the national financial press, you had won a major battle, if not the war, because of its sway over the key constituencies: big institutional investors, small shareholders, politicians, regulators and public opinion more generally. A business editor in possession of a well-regarded column was close to a deity in this world, and wooing her onto your side was the holy grail.
Social media opens new avenues: companies could to some extent bypass the business editors and communicate directly with their audiences by, for example, setting up microsites dedicated to the bid. It’s a useful tool for communicating with employees and investors, keeping them informed and shooting down rumours, and tuning into social media as a listening device will reveal a lot about public sentiment on the bid, as well as brand and products.
But as information and opinion proliferate on the web, people turn to trusted guides – and that’s where the business editors and the financial pages come into their own, particularly for small shareholders, who are often overlooked but can have a major say in who wins or loses a bid. The arguments involved in bid battles can be relatively complex, so they are ideally suited to a discursive print article, but it’s a bit difficult to convey your defence strategy in a tweet.
The case of Cadbury is interesting because it enjoys a status similar to Marks & Spencer, in that virtually every Briton knows their products, feels they have a stake in the brand, and recognises the company’s Quaker heritage of benevolent capitalism. People are worried that its ethos will be subsumed into Kraft’s American corporate culture, so there is a large emotional, as well as financial component to this bid.
The Sun, whose readers are exercised about the future of the Creme Egg, or The Observer, with our interest in ethical investment and corporate practice, could be just as influential as The Financial Times with its focus on shareholder value.
Cadbury not only has the challenge of dealing with a changing media universe, but also a financial landscape that has been radically altered by the credit crunch, where shareholder value is no longer the only consideration. Now the media, in its old and new incarnations, are asking a different sort of questions, such as: how can companies like Cadbury put a value on their values? Should ‘emotional’ factors such as heritage or ethics be considered? In a chastened, post-crunch environment, cold-eyed capitalism alone doesn’t cut it anymore – and that’s the big communications challenge.
