The Daily Mail, though, can as ever be relied upon to angrily voice the concerns of Middle England at the latest German foray into the UK. "The ease with which Robert Wiseman, which provides about a third of Britain’s milk, has fallen into foreign hands will yet again raise questions over whether enough is being done to protect key UK businesses", it said. Its columnist Alex Brummer adds further grist to the mill, arguing that "the UK still has a cavalier approach to overseas takeovers. Selling off a dairy producer may seem of little consequence. Yet we should not forget that milk is a national staple, and past sales of important companies to German parents – notably Thames Water to RWE – have not proved to be in the best interest of the UK consumer". He suggests greater scrutiny of the deal in the public interest lest the unscrupulous new owners jack up the price of milk and yoghurt (although doesn't mention the farmers which are the bottom of the milk chain and are the most likely to face a further squeeze as a result of this deal.)
The Robert Wiseman takeover is unlikely, though, to generate the same outpouring of public grief that the fall of Cadbury's to Kraft did back in 2008, partly because not many people know or care what the source of their milk is, even though they drink a lot of it, but also because milk is already a lot cheaper than it really should be. It's hard for dairy producers to differentiate their product, which means they have virtually no pricing power. Supermarkets have taken advantage of that fact to drive down prices even though producers have also faced a barrage of cost increases - not least the price dairy producers pay farmers for raw milk - which is why Robert Wiseman's shares have taken a battering in the last year or so. Dairy producers now make little more than a penny per litre of milk they produce, which is less than half the level they were making a year ago and hardly seems like an adequate return given the capital intensity of the industry. You don't hear too many shoppers complaining, though, nor are they likely to once the deal is complete, because although Wiseman's ownership will change the structure of the supply base will not, meaning prices are likely to stay low. For all the talk of supermarket ombudsman to police the rapaciousness of grocers, there seems to be no appetite in government for taking on these retail marauders.
So while it's likely that the Wiseman takeover will prompt a few more calls for a long awaited Cadbury's law to prevent British firms from falling to foreign predators and protect workers from new foreign bosses seeking to slash costs, I don't see such objection to foreign ownership as anything other than rose-tinted jingoism. True, family businesses in the UK like Robert Wiseman have proved far more susceptible to take over than their European counterparts, partly because they have often turned to public markets to finance growth in a way that European family businesses have not (indeed, after more than a century Müller is still in private family hands, while the families still entrenched in publicly quoted European family businesses like BMW or L'Oreal have made sure that voting power, at least, remains with them).
But independence has certainly not protected the interests of Robert Wiseman's shareholders from market imbalances, including the Wiseman family whose 33 per cent stake in the business is worth a lot less than it was 2 years ago, even after Müller's generous offer of 390p a share and a 5.75p dividend which values the business at a 60 per cent premium to the price before news of its interest broke.
Nor has it protected the interests of workers, who have faced the ongoing prospect of redundancy as Wiseman consolidates its manufacturing base to offset the steady erosion of its profitability in the face of industry pressure. Indeed, British owners are just as likely to slash costs if things turn bad as foreign ones, as Premier Foods demonstrated yesterday when it announced 600 job losses to trim its cost base as part of its recovery plan. Wiseman is often applauded for the investment its made in state of the art processing facilities, but that conveniently forgets that its dominant position in UK milk is the result of nearly half a century of acquisitions of smaller, less efficient rivals and the closure of their smaller, less efficient dairies. If a foreign owner does the same, it is considered outrageous.
It's time, then, to put a stop to this hypocritical nonsense, especially as British companies have hardly proved shy when it comes to buying businesses overseas and 'driving efficiencies' from them. We can't enjoy the benefits of a free market on one hand and then try to enforce the protectionism so beloved of our neighbours with the other. And just because France declares its dairy industry to be of national importance doesn't mean that we should, too, especially as it's an industry that few in the UK have so far done very much to support.
