Faced with a popular call for an apology, a company really has only two choices. Option A is to accede, detailing precisely what is covered by the apology and, if necessary, explaining why the apology was slow to be made. Option B is to refuse, usually because the board feels there is no need to apologise.
Peter Fankhauser, beleaguered chief executive of Thomas Cook, attempted a fudged approach on Monday – and inevitably came across as devious and insincere. He apologised to the family of two children killed by carbon monoxide poisoning in a hotel in Corfu in 2006 “for all they have been through.” That was the extent of it.
The words, one assumes, were dictated by lawyers because it is impossible to tell if Thomas Cook is admitting any failings. An inquest in Wakefield last week found the company breached its duty of care to the family. Does Thomas Cook accept the finding?
Or is it sticking to Fankhauser’s line during the inquest that the hotel, three of whose staff were convicted of manslaughter by a Greek court, was solely to blame? Fankhauser said during the hearing that “there’s no need to apologise because there was no wrongdoing by Thomas Cook.” That, at least, was clear.
In a cack-handed attempt to counter bad publicity, Thomas Cook donated to Unicef the £1.5m it received from a settlement with the owner of the Corfu hotel. But it couldn’t even handle this announcement straightforwardly. “I believe this is the right thing to do,” said Fankhauser, failing to explain why it wasn’t the right thing to do when the cash was received in 2013 and 2014.
At one level, this is a textbook example of the perils of giving lawyers too much influence. But that is no excuse. Fankhauser, chairman Frank Meysman and colleagues have had months to think about the correct response to all possible findings of the inquest. They have ended up making a half-apology, a belated donation and equivocal statements. Customers will surely deliver a stronger opinion than 3% off the share price.
The battle for Bwin
Lest we forget, Bwin.Party Digital Entertainment, the £850m online gambling company likely to receive takeover bids from smaller rivals 888 and GVC, was a member of the FTSE 100 index in a previous incarnation.
In the mad summer of 2005, pre-merger PartyGaming managed to float in London with a £5bn price-tag even though, as the prospectus had to admit, its activities were considered illegal in the US. The valuation – more than Rolls-Royce at the time – was plainly ridiculous since it was obvious that the fad for online poker would never be sustained.
When the warnings about US legal risks materialised, PartyGaming’s shares collapsed, leading indirectly to the merger with Austrian-listed Bwin, mostly a sports betting operator. Cue a fresh round of hype about strength through diversity of earnings. In reality, the takeover talk has merely taken the share price back to where it was four years ago. Bwin.Party is in no position to repel serious bidders.
For its shareholders, there is at least the prospect of a well-matched contest. 888 has a reputation for developing smart technology and operates in regulated markets. On the other hand, the company’s large Israeli family shareholder is hard to read; a generous-looking takeover approach this year from William Hill was a runner until it wasn’t.
GVC is a £220m tiddler, which ought to be a heavy disadvantage. But it has a big friend in Amaya Gaming, the Canadian-listed outfit that bought poker-leading website Pokerstars last year; an offer via a joint vehicle (with Amaya taking Bwin’s poker operation) is likely.
The size of the cash component will matter to Bwin’s weary shareholders but so will the accompanying share element. Will they value 888’s or GVC’s paper more highly? It’s a close call. GVC’s shares have trebled in three years and there is no dominant shareholder in the wings. 888 should still be favourite by virtue of greater size and superior cost savings. But Avi Shaked could help himself by explaining to would-be new investors why he spurned William Hill.
HBOS report overdue
In September it will be seven years since the implosion of HBOS, necessitating the takeover by Lloyds TSB. So how’s the report into HBOS’ failure going? This document was deemed too sensitive to publish before the election. Besides, those criticised get a chance to respond under the so-called Maxwellisation rule. So what’s the timetable?
“We are committed to publishing the report as soon as possible but the legal process of Maxwellisation is currently underway and this can take some time,” says the Bank of England. Not before the seven-year anniversary, one suspects.
