GPG: the hunter becomes the hunted

Talk about being hoist with your own petard. The decision by Guinness Peat Group to break itself up thanks to pressure from activist investors is almost laugh-out-loud ironic. This is the investment firm that became the poster boy of the new breed of activist investors in the 1990s, which became a thorn in the side of many of Britain’s best-known stock market names, from Newbury Racecourse to De Vere Group and, most famously, Young & Co’s Brewery. The firm’s strategy was a simple one: identify companies with undervalued assets then coerce the board into taking the decisions necessary to unlock that hidden value. Unsurprisingly, GPG’s arrival on a shareholder register was generally about as welcome as a pint of warm beer on a hot summer’s day. John Young, the late and much-loved chairman of Young’s, was particularly combative in his ripostes to GPG’s incursions, donning boxing gloves, a beekeeper’s outfit and even dressing as Queen Victoria at successive AGMs to show his displeasure. In many cases, GPG’s activism has been a catalyst for change. For all John Young’s feisty responses, the brewer did end up selling its brewery in Wandsworth (for a hefty price), injecting its beer business into a joint venture with Charles Wells and reinvesting some of the proceeds into pubs. Arguably, the recent Geronimo Inns acquisition is a continuation of those winds of change. While Steve Goodyear and his boardroom colleagues would doubtless beg to argue that the changes were initiated despite rather because of GPG, I suspect most objective observers – this one included – would accept that the persistent prodding in the ribs from Blake Nixon, the GPG UK boss, did speed up the process. One of his principal bugbears was the antiquated Young’s share structure and it cannot be mere coincidence that change on this issue duly came to pass. Other brewers to taste the sharp end of Nixon’s tongue have included Adnams and Daniel Thwaites. As with Young’s, Nixon felt that most of these were underperforming companies where sleepy family management were hiding behind dual share structures, although in the case of Fuller’s his relatively short (and quiet) spell on the share register suggests he had simply spotted a cheap share. All of which will have meant that Friday’s news from GPG was wryly received in more than a few boardrooms. In short, the scourge of family brewers has been forced to concede defeat to its own activist investors after accepting that its complex and unwieldy structure was holding back its performance and share price. Nixon himself admitted that the structure had “run its course” and that selling off its investment over the next couple of years was the best path to shareholder value. This effectively hoists a for sale sign over its stakes in Young’s, Adnams, Thwaites, Shepherd Neame and Fuller’s. But before anyone starts downing a celebratory pint or two, I have a warning for you. I understand that Nixon and two of his London colleagues are already formulating plans to raise money for a new fund – or take over management of an existing fund – with a view to bidding for a slug of some of GPG’s UK investments. Like Arnold Schwarzenegger, he’ll be back. M&B - what a difference a year makes Another bit of news last week that caused a few raised eyebrows was the appointment of Simon Burke, the former Hamleys boss, as chairman of Mitchells & Butlers. As I predicted in this column last autumn, John Lovering opted to call time on his tenure after just a year in the post, and Burke, already deputy chairman, was a shoo-in. But hang on a minute! This is the same Simon Burke who, in the run-up to last year’s extraordinary AGM, had – along with Archie Norman and one other unknown candidate for chairman – been effectively blocked by the “non-concert party” of Piedmont and Elpida. So what’s changed? Well, nothing much except that last time Piedmont and Elpida were minded to block just everything the board was putting forward, regardless of whether it was a good idea or not. Now that harmony between board and the main investors has been restored, Burke’s chairmanship has been clearly been accepted as a positive thing. Until he does something that Piedmont and Elpida disagee with. Dominic Walsh is leisure industries correspondent for The Times