BP shareholders need protecting from David Cameron

http://www.ft.com/cms/s/0/2c803100-ecc2-11e4-b82f-00144feab7de.html#ixzz3YW3sP9Dw

LOMBARD

April 27, 2015 11:39 am

BP shareholders need protecting from David Cameron

Jonathan Guthrie/FT

Call that a national champion? BP is a curious business to receive such a flattering title, via government protection from takeover. Its standout achievements in recent years have been dumping 200m barrels of oil in the Gulf of Mexico and allying itself with a business linked to the Russian state, invader of the Crimea.

What other internationally-unappreciated UK institutions will David Cameron choose to exalt next? The England football team? Class prejudice? Or bad dentistry?

The prime minister’s intervention strikes a further jarring note by commandeering private property rights. The UK sold a “golden share” in BP, which had allowed it to block takeovers, in 1987. To protect BP today, Westminster would need to make energy supply an element in national security.

We can impute two motives to Mr Cameron in extending the traditional rural welcome “Get off my land!” to any would-be foreign bidder for BP, of which ExxonMobil is the most-mooted candidate. First, it is simpler than driving trespassers off with a spot of muckspreading mid-bid, as he did during Pfizer’s abortive tilt at AstraZeneca. Shell’s takeover of BG has increased speculation about further consolidation, says Panmure’s Colin Smith.

Second, there is an election, apparently. Mr Cameron cannot stop Romanians from relocating to Ipswich. But he can look tough by scaring away foreign investors.

In BP’s case, the national champion is run by an American chief executive and makes around four-fifths of sales outside the UK. The group has no high-profile technological advantage of the kind held by AstraZeneca or Rolls-Royce. Nor does it makes bombs and guns for the armed forces likeBAE, which Mr Cameron was happy for Franco-German EADS to buy.

But at this febrile time, ownership rights are increasingly the playthings of vote-hungry politicians. Labour proposes disenfranchising investors who acquire shares after a takeover is announced. The Conservatives plan to let tenants buy their homes without the consent of the housing associations that own them.

BP shareholders have paid for the right to determine the company’s future. The government has not. It is Mr Cameron, rather than Jonny Foreigner, who should hop it.

jonathan.guthrie@ft.com