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Inside

Any port

in a storm

All this talk

of Brexit

chaos shows

we depend

too much

on Dover

Ambrose

Evans-

Pritchard

Money for

old phones

Most UK

households

have a small

fortune in

old gadgets

merely

gathering

dust in

drawers

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Business

Get the latest markets info, share prices and create a portfolio at telegraph.co.uk/markets-hub

By Oliver Gill

FEARS have been raised that Greene
King’s shock sale to one of Asia’s richest
families is “almost certain” to result in
pubs being shut and could lead to the
sale of its famous Bury St Edmunds
brewery.
CK Asset, part of an empire built by
91-year-old billionaire Li Ka-shing,
struck a £4.6bn deal on Monday to buy
the 220-year-old Suffolk brewer. The

swoop was at a premium of more than

50pc of Greene King’s share price.

Despite written assurances from CK

Asset that there would be “no material”

job cuts or changes to strategy, the deal

sparked immediate concern that the

prospective new owners would want to

quickly recoup some of that premium.

Peter Marks, the boss of Deltic, Brit-

ain’s biggest nightclub chain, believes

that once the deal is completed, Greene

King’s new Hong Kong owners could

soon be ringing in the changes.

He said they would be “almost cer-

tainly going to consider” plans such as

selling freeholds, selling the pub oper-

ating company or turning some ten-

anted pubs into managed ones.

CK Asset may also feel the need to

close one of Greene King’s two main

offices in Bury St Edmunds or Burton

upon Trent, he said.

The comments by Mr Marks, who,

with more than three decades of expe-

rience running bars and clubs is seen

as one of the leisure sector’s most influ-

ential voices, come after unions de-

manded reassurances over job security,

pay and employment conditions.

Unite said that the sale could have

“major ramifications” for Greene

King’s 38,000 workers.

Beer groups were also unnerved.

The Campaign for Real Ale (Camra)

labelled it “very concerning for our

beer scene”.

The Greene King sale, which will

need to be approved by shareholders,

comes as pubgoers have been spooked

by corporate activity that some say

threatens the future of the traditional

British local.

Last month Ei, the owner of Britain’s

biggest pub estate, agreed to a takeover

by Slug & Lettuce and Walkabout

owner Stonegate in a deal worth £3bn.

Meanwhile, London Pride brewer

Fuller’s sold off its Chiswick operations

to Japanese giant Asahi earlier this

year. With  the Fuller’s sell-off fresh in

the memory, speculation has mounted

that CK Asset may explore similar plans

for Greene King’s brewing operations

in Suffolk, the roots of which go back

to 1799.

One pub group chief executive

warned that such a strategy “would

run the risk of undermining” the

Greene King brand.

“The value of authenticity and herit-

age that comes from the Greene King

history,” the person said. “The value of

the Greene King brand should not be

underestimated.”

Greene King’s dual-headquarters

structure, in Bury and Burton, is a leg-

acy of its £774m takeover of Spirit Pub

Company in 2014. The executive saw

no reason for this to be changed, saying

that Greene King has thus far “found a

need” for both sites.

Another pub chief executive said:

“Obviously the weakness of sterling

makes such assets relatively attractive,

[but] I have no reason at this stage to

suppose that they will not continue

with the business as is.”

Meanwhile, Tim Martin, the boss of

Wetherspoon, said he did not think

the  Li family were looking to turn a

quick profit.

“Since they own Superdrug and em-

ploy a lot of people ... I suspect they’ll

stick around for a few decades,” he said.

Ben Marlow: Page 29

Blow for Javid as borrowing surges More woe for Woodford after Guernsey delisting

By Tim Wallace

SURGING spending and
weak revenues are pushing
up the budget deficit, leav-
ing the Treasury on track for
a surge in borrowing of
£26bn this year, economists
warned, potentially taking
the deficit to nearly £50bn
even before any extra “no-
deal” Brexit spending.
In the first four months of
this financial year, the Ex-
chequer borrowed £16bn,

£6bn more than the same

period last year, the Office

for National Statistics said.

And it is likely that higher

spending combined with a

weaker economy will push

up the deficit. The national

debt amounts to just over

£1.8 trillion, the equivalent

of 83.4pc of GDP. July is usu-

ally a good month for the

public finances, running a

surplus as corporate tax pay-

ments are due, as are some

self-assessment income tax

payments. This year’s sur-

plus disappointed, falling to

£1.3bn (£3.6bn last year).

Smaller revenues from the

Bank of England’s stock of

bonds bought under quanti-

tative easing hit the public

finances, while income tax

revenue rose less than 2pc.

Overall revenues in July

slid 0.5pc on the year even as

current spending rose 4.2pc,

with higher social benefit

payments and a rising public

sector wage bill.

By Harriet Russell

NEIL WOODFORD has been

dealt a further blow in his

struggle to bring his invest-

ments into line with market

rules, after a developer of

luxury Ibiza villas he backed

was delisted from the Guern-

sey stock exchange.

The Woodford Equity

Income Fund stake in Sabina

Estates, which is chaired by

millionaire Anton Bilton,

was listed in 2017 as part of

an effort by Mr Woodford to

lift the proportion of quoted

assets in his flagship fund.

He has come under fire for

holding too many unquoted

or “illiquid” stocks. Under

FCA rules no more than a

tenth of such a fund’s assets

should be unquoted.

Last month, it was re-

vealed that Mr Woodford’s

suspended flagship equity

income fund had breached

limits after two of his invest-

ments, Benevolent AI and

Industrial Heat, also delisted

from the Guernsey stock

exchange. At the end of July,

he was told he had six months

to correct the situation.

The delisting of Sabina

Estates means it is estimated

Mr Woodford’s illiquid hold-

ings represent 18pc of his

£3.2bn Equity Income Fund.

A spokesman for Wood-

ford Investment Manage-

ment said: “Following the

inadvertent passive breach,

action to bring the fund back

into compliance is already

under way.

“On May 3, we informed

investors that the fund’s

exposure to unquoted secu-

rities would be significantly

reduced – including those

listed on exchanges where

there is currently little or no

trading activity. The deci-

sion by Sabina to delist from

[The International Stock

Exchange]will have no im-

pact in how the assets are

managed within the fund.”

Pub closure fears sour Greene King sale

Li Ka-shing’s $4.6bn swoop

for the brewer will ‘almost

certainly’ lead to cuts, says

chief of nightclub chain

One of Greene King’s

two main UK sites

could be closed, said

Peter Marks, the boss

of Britain’s biggest

nightclub chain

Dynasties at war over

Berlusconis’ plan for

European TV empire

By Christopher Williams

IT IS a battle that has two of the Conti-

nent’s wealthiest dynasties going head

to head.

Both have dreams of a pan-European

television empire capable of with-

standing the streaming onslaught of US

tech giants – and both have a history of

giving their opponents no quarter.

On one side is the Berlusconi family,

headed by media tycoon and former

Italian prime minister Silvio, now 82

and back in frontline politics as a mem-

ber of the European Parliament.

The Berlusconis aim to use their

broadcaster, Mediaset, as the corner-

stone of a venture that would combine

many of Europe’s traditional channels,

perhaps one day including ITV.

Standing in the way, across the Alps,

is the Bollore family led by 67-year-old

patriarch Vincent. They control the

French media giant Vivendi, which has

taken a stake of nearly 30pc in Media-

set and is working to disrupt the plans.

Vivendi, which owns Canal+, has

long held ambitions of uniting Euro-

pean broadcasters under its own um-

brella. Now Mr Bollore is in danger of

watching his visions of super-mogul-

dom realised by Pier Silvio Berlusconi,

50-year-old chief executive of Media-

set and eldest son of populist Silvio.

Pier Silvio, backed by his sisters Bar-

bara and Marina – chairman of the fam-

ily holding company Fininvest, aims to

merge Mediaset with separately listed

sister company Mediaset Espana, the

largest TV network in Spain.

The combination is due to be incor-

porated in the Netherlands under the

banner MediaForEurope. In May, as a

signal of intent, Pier Silvio and Media-

set took a stake of almost 10pc in the

German broadcaster ProSieben.

He also named the French channel

TF1 as a potential target in a roll-up of

traditional broadcasters attempting to

adjust to the success of streaming and

rapidly shifting viewing habits. ITV,

Europe’s second most valuable com-

mercial broadcaster, also figures some-

where in Pier Silvio’s thinking.

MediaForEurope, with initial access

to 107m viewers, will have stronger

bargaining power with rights holders

and pay-TV operators, he claimed. The

heft will help it compete better with

the likes of Netflix and Amazon,

according to the investor presentation.

Mr Bollore’s plans were based on

similar logic, but he became bogged

down in a long and damaging battle

with the activist fund, Elliott, over con-

trol of Telecom Italia, another Vivendi

adventure south of the Alps.

He is now attempting to block the

creation of MediaForEurope in Media-

set shareholder votes early next month.

However, Italian regulators have effec-

tively barred Vivendi from casting its

votes due to its control of Telecom

Italia and concerns over cross-owner-

ship of media and telecoms.

Last night, sources said Vivendi was

working on legal challenges, but for

now Mr Bollore must hope other share-

holders such as Invesco and Blackrock

follow the advice of advisory group ISS.

Its report on the plan for Mediaset

Espana shareholders said: “The pro-

posed governance structure has the

clear goal of cementing the control of

the Berlusconi family, apparently to

pursue an M&A growth strategy with-

out losing control of the combined

Family viewing: Barbara Berlusconi is backing her brother Pier Silvio’s bid to unite traditional TV channels in Europe under the dynasty company.”

GETTY IMAGES FOR LUISAVIAROMA

Advisers to pocket £220m in fees if Advent wins battle for Cobham

By Alan Tovey

THE proposed sale of Cobham will rack
up fees of almost £220m for banks and
other advisers if the FTSE 250 aero-
space and defence firm is taken over by
a US-led private equity consortium.
The deal, which values it at £4bn,
will mean charges estimated at £166m
to £190m for buyer Advent and £29m

for Cobham, according to the scheme

of arrangement document yesterday.

Advent expects to pay about £140m

to £147m for financing arrangements

and corporate broking advice. It lists its

bankers and advisers as Citigroup,

Credit Suisse and Goldman Sachs.

Legal, accounting and PR advice,

along with other services and fees tack

between £26m and £33m on to its bill.

Cobham is paying a total of £28m for

financial advice, and states its bankers

as Bank of America Merrill Lynch, JP

Morgan Cazenove and Rothschild.

Management at Cobham have rec-

ommended investors support the 165p-

a-share offer – a 34.4pc premium – that

was made last month.

David Lockwood, chief executive,

said the bid was an “endorsement of

the turnaround strategy” he had led,

after being installed to revive the com-

pany following a series of troublesome

acquisitions by previous management.

Advent has secured the support of

Artemis, which holds 5.1pc of Cobham,

and needs 75pc of the shareholder vote

on Sept 16 for the deal to go ahead.

However, Cobham’s largest investor

Silchester International, which has a

stake of almost 12pc, said it is not con-

vinced by Advent’s offer and that the

price is not “compelling”.

The sale will also face scrutiny from

Ben Wallace, Defence Secretary, who

has pledged to look at the deal to see if

it is in the UK’s national interests. He

made the promise in a letter to the

firm’s founding family after being con-

tacted by Lady Nadine Cobham.

34.4pc

Premium on 165p-a-share offer for

defence group Cobham made by US-led

private equity consortium Advent

Deep Mind

co-founder

put on leave

By Olivia Rudgard in San Francisco

MUSTAFA SULEYMAN, co-founder of

Google’s London AI lab DeepMind, is

taking a leave of absence amid contro-

versy over some of its work.

DeepMind, which Google bought for

about £400m in 2014, is seen as a lead-

ing force in artificial intelligence re-

search but has been criticised over its

work with the NHS.

Mr Suleyman, who set it up in 2010

with chief executive Demis Hassabis,

has been one of DeepMind’s public

faces since it was bought.

He is the lab’s head of applied AI and

led the development of the company’s

healthcare arm, until it was transferred

to Google last year.

A spokesman told Bloomberg Mr Su-

leyman was “taking time out right now

after 10 hectic years” but did not say

why he had been put on leave.

In 2017 the Information Commis-

sioner’s Office said data from 1.6m pa-

tients had been illegally shared with

the firm by the capital’s Royal Free

Hospital.

At the time, Mr Suleyman said it had

“underestimated the complexity of the

NHS and of the rules around patient

data, as well as the potential fears about

a well-known tech company working

in health”.

Last year his company was forced to

defend the decision to transfer its

health division to Google, having pre-

viously promised that the two would

remain separate.

A spokesman said he was

‘taking time out after 10

hectic years’ but did not say

why he was put on leave

The Daily Telegraph Thursday 22 August 2019 *** 27

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