1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168 
Could independent makes fall to the new giant?
Page 80
Page 81
If you've noticed an error in this article please click here to report it so we can fix it.
What Atkinson's chairman thinks about it
• How real is the risk that the current Leyland enthusiasm for big grouping might entail absorbing any of the small heavyvehicle producers in which it already has a small shareholding? It was officially revealed in January that such a minority Leyland holding applied to Atkinson Vehicles Ltd. as well as to Fodens Ltd.
There has been plenty of speculation in the financial press about a future takeover of Atkinson, and apprehension on the same subject by the rest of the road-transport industry—not least by operators of Atkinsons throughout the world.
Although the formation of the mammoth British Leyland Motor Corporation has mostly produced a reaction favourable to companies such as Atkinson in terms of sales, there have been opposite reactions: one big company in Australia cancelled its orders for Atkinsons when it learned about the Leyland stake in the Knight of the Road marque (it has since been soothed and has reinstated the order, but the reaction was significant).
I asked Atkinson's chairman, Mr. A. W. Allen, what he thought about the situation. Why hadn't Atkinson made some statement to dispel the takeover rumours? His strategy, he said, was deliberately not to stir up any fuss. "The facts are these", he said. "Ten years ago, Sir Henry Spurrier, Leyland's late boss, bought a 19 per cent stake in Atkinson's shareholding to ward off American companies who were seeking a foothold in the British market. That stake has never changed, and it is still 19 per cent. It is now regarded purely as a financial investment.
"It became public knowledge in January this year because new company law required concerns to reveal shareholdings in other companies. My message to anyone who is worried is simply that we at Atkinson are not getting excited about this Leyland shareholding and no one else need get excited about it either."
All the same, I pressed, was there any incentive for Leyland to make a bid—or to increase the shareholding to a degree which would put a Leyland man on the Atkinson Board or cause pressure to be put on Atkinson to use BLMC components, as seemed to be happening at Fodens where the Leyland stake was over 25 per cent?
Mr. Allen gave some cogent reasons for believing that any incentive was weak. He did not think that Sir Donald Stokes would now be too anxious to encourage an image of being a monopolist. He thought that BLMC had quite enough on its plate for a long time to volunteer for yet more responsibilities.
Mr. Allen felt that Sir Donald was a believer in retaining some competition in the market to chivy his own executives and to act as a comparator for his own company's performance. At present, at any rate, Atkinson would not be a cheap buy; a price covering its assets value many times would need to be paid.
"What would Leyland gain?" Mr. Allen asked. "There will always be a place for the small manufacturer, satisfying markets it would not be economic for a big concern to dabble in." If Atkinson were swallowed up there would soon be another popping up in its place. Using BLMC components would completely alter the products' appeal to the customers who chose to buy vehicles like Atkinsons.
"Also, you cannot look at Atkinson in isolation. You must remember ERF, in which Leyland cannot buy control because Mr. Peter Foden and his family hold more than 50 per cent of the shares. I cannot see Leyland taking over Atkinson just for the effect of driving most of Atkinson's customers to ERF."
Under what hypothetical circumstances would Atkinson sell out? "Well, obviously there must be a price at which shareholders could not be recommended to refuse—but I repeat again that I feel that the price would be prohibitive. The only other circumstances could be that we should actually ask to be taken over, or that our business changed to such an extent that the share price more closely approached the value of the physical assets."
A slump in Atkinson's performance was most improbable as far as Mr. Allen could see. "Our most effective weapon against a takeover bid is our own efficiency and profits performance." Reorganization of production and service was already bearing fruit, he said. Production was running 15 per cent higher than in 1967 and would improve even more yet. There was no shortage of orders or of ideas. "A small manufacturer can benefit from being able to respond quickly to market demands." Closeness to the field of operation gained Atkinson a lot of business, pointed out Mr. Allen.
Apart from all this reasoning, had he any contingency plans up his sleeve if a bid— from anywhere—came? "Yes." But he wasn't elaborating.
Could the independent manufacturers, particularly Atkinson, ERF and Seddon, safeguard themselves by each taking a stake in the other two companies—a cross-fertilization of shares? They could, said Mr. Allen, but to be a successful hedge against a takeover the total stake of two companies in another would have to exceed 50 per cent. A deal of this magnitude could not be made without informing shareholders and this might well encourage counter-action by BLMC and completely turn the tables on the operation's objectives.
Was there a case for the independents banding together in a looser fashion—exchanging components so that each company's production of a unit could be at a more attractive economic level? "This has been raised several times at Atkinson Board meetings", said Mr. Allen, "but there always seems to be a clash of personalities when it comes to considering a plan seriously." He also put forward the view that it was all very well in the short term investing in expensive plant to make, say, axles, as Seddon had done, but he had qualms about designs needing to be changed, involving a fresh big investment, before the old design had been produced in an economic quantity.
Could there be worthwhile co-operation in export markets? Could there be benefits from trading agreements between the independents by which a manufacturer strong in a particular country could also market and service complementary models of a contemporary—thus preventing spreading thin resources and strengthening the export markets of all the independents concerned? "We've thought about this, too", said Mr. Allen.
There seemed scope for complementary marketing of Atkinson and Seddon, for example. Again, however, close examination threw up problems, mainly in foreseeable bickering about respective responsibilities, accusation that one or the other was not pulling its weight or that there were service complaints. Maybe the problems were not insuperable, and there was basic attraction in complementary marketing, but discussions had never developed into negotiations.
So the independents look like remaining independent for a considerable time yet. They are all doing well at present—better, comparatively, than their giant competitors.
Whether they can keep up their good performance beyond the next couple of years is less certain, however. By then BLMC and the American groups will probably have sorted themselves out to a useful and formidable degree and the value-for-money terms with which operators assess potential equipment might begin to favour the large makers' products. And the independents might begin to miss the lack of research and development investment.
Still, as Mr. Allen says, the small makers are not twiddling their thumbs. They have plenty of ideas. There should "always be a place for the small manufacturer".