Jim Pickard in London and Nathalie Thomas in Edinburgh reported this week (FT) that the British government is exploring ways to remove China’s state-owned nuclear energy company from all future power projects in the UK.
The US and its allies are hoping to prevent China from obtaining sensitive technology and to protect their own supply chains or critical infrastructure from over-reliance on Chinese technology.
These include the consortium planning to build the new £20bn Sizewell nuclear power station in Suffolk (model above) and proposals by China General Nuclear to build a new plant at Bradwell-on-Sea in Essex using its own reactor technology.
These proposals follow a chilling in relations between London and Beijing in recent years and The government’s decided to force Chinese telecoms equipment maker Huawei out of Britain’s 5G network
British ministers are concerned about CGN‘s involvement in critical UK infrastructure and believe Sizewell would be viable without the Chinese company -‘according to people close to the discussions’.
Discussions are already taking place with the lead developer of Sizewell C, the French state-backed utility EDF, about whether it could find new partners for the project, the source added.
Another person close to the discussions said Number 10 did not want CGN involved in either project but hoped the company would withdraw without a confrontation.
Both CGN and EDF declined to comment.
How reliant is EDF on Chinese expertise?
EDF is using the technical input of CGN engineers on Hinkley Point C, which will operate using European Pressurised Reactor technology, a Franco-German design. CGN’s Taishan nuclear power plant in southern China was the first in the world to operate using EPR technology and more than 100 CGN engineers have been involved with Hinkley Point C, around 50 on-site in Somerset.
The removal of CGN from Sizewell could help EDF to attract North American infrastructure investors to the project, which nuclear industry leaders said would otherwise be challenging with Chinese involvement.
The government refused to confirm or deny that it no longer wanted CGN to take part in the nuclear programme. “All nuclear projects in the UK are conducted under robust and independent regulation to meet the UK’s rigorous legal, regulatory and national security requirements, ensuring our interests are protected,” a spokesperson said.
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JULY 29 2021 0 Print this page Regarding “Safeguarding Britain’s nuclear power future” (The FT View, July 27), it might first be sensible to ask whether it is reasonable that consumers pay a never-ending amount for Sizewell C. May I ask you when did you last pay for something that is not yet proven? And when did you last agree a deal for a nuclear plant without checking the due diligence of its French owners who have had an appalling run in their own country? In East Suffolk, we have little or no infrastructure. This has been the case since 1963 when Beeching closed our railway connections. It now takes two and a half hours by bus and train and longer by car to travel in to London. Building a brand new town bigger than Aldeburgh or Southwold which would house the skilled workers needed would decimate our wonderful natural countryside and many small parishes that have been here since before Domesday. Derek Wyatt Former MP, Aldeburgh, Suffolk, UK
Whistleblowers 18: Daniel Hale’s crime – bypassing official channels, handing documents to the media
Daniel Hale, who became a US Air Force intelligence analyst at the age of 20 in 2009, pleaded guilty in March to breaking the Espionage Act.
During his time in the air force between 2009 and 2013, Mr Hale worked in Afghanistan with the US’s National Security Agency (NSA) and military identifying people for drone-strike assassination by hacking the phones of suspected combatants and pinpointing their location. This information was then passed to a drone pilot in the US who would keep surveillance on the target before they were captured or killed.
Mr Hale leaked secret documents to The Intercept in 2015 which revealed the harm done to innocent civilians by the Obama administration’s drone strike programme.
“Not a day goes by that I don’t question the justification for my actions,” Mr Hale wrote in a letter to the judge presiding over his case on July 18 (handwritten letter not very clear, transcribed here).
Mr Hale said that when he thinks of what he helped the US do in Afghanistan, such as blowing an innocent farmer in half or killing a suspected car bomber’s two children:
“I am grief-stricken and ashamed of myself. I only could do that which I ought to do before God and my own conscience. The answer came to me, that to stop the cycle of violence, I ought to sacrifice my own life and not that of another person. So I contacted an investigative reporter and told him that I had something the American people needed to know.”
NSA whistleblower Edward Snowden said: “He sacrificed everything … to tell us that the drone war that [was] so obviously occurring to everyone else, but the government was still officially denying in so many ways … is happening, and 90% of the casualties in one five-month period were innocents or bystanders or not the target of the drone strike. We could not establish that, we could not prove that, without Daniel Hale’s voice.”
Whistleblowers should go through the proper channels (Ed: which know how to bury bad news)
Judge Liam O’Grady said he was persuaded that Hale was motivated in part by genuine outrage over civilian casualties of U.S. drone operations; he was not facing prison for speaking out about the drone program injuring and killing innocent persons. … A majority of Americans would have commended him for coming forward but he could have joined that debate without leaking classified information to The Intercept, an online news outlet, or resigned from the military or told his commanders he wasn’t going to do this anymore. Politico believes that the sentence signals that prosecutors will continue to throw the book at the men and women who leak information to the media.
On July 27th Mr Hale was sentenced to three years and nine months in prison during a hearing in U.S. District Court in Alexandria.
Bargain basement buyout 4: ‘opportunistic foreign bid’ for world-leading British sonar technology company
US private equity giant Advent, fronted by UK-based Cobham, has launched a £2.6bn bid for Ultra Electronics (Financial Times).
Ultra is a world leader in submarine hunting sonar, supplying radio communications and cyber security to key military programmes such as the F-35 and Typhoon fighter jets. It is profitable, with a full order book. The sonobuoy market in particular is booming because of an anticipated Chinese and Russian threat to submarines. Ultra’s Linked-in entry records 1168 employees in Britain and a similar number in Canada and the USA.
Ultra’s hull-mounted sonar
Cobham UK – after developing strategic air-to-air refuelling technology – was bought by Advent last year. ‘Predator Advent’ had been urged to ‘come clean’ about its intentions when the proposal was first mooted, but The Guardian reported that within 18 months of taking control, Advent had sold more than half of what it bought by value, including the refuelling business: “Advent rapidly moved to break it up, despite the limited assurances it made to the government”.
Would Advent’s assurances to government be honoured?
Lex says the proposed deal is raising concerns over the vulnerability of smaller UK defence companies with specialist technology to opportunistic foreign bids and ads that the Ultra/Cobham: defence deal “may merit torpedoing”
In December 2020, AFP reported that Chancellor Angela Merkel’s government blocked a Chinese defence company from buying IMST, an innovative German company specialising in satellite and radio technologies including 5G over national security risks.
The daughter-in-law of the company’s founder Sir Alan Cobham, said – as Cobham passed into American ownership – “In Cobham we stand to lose yet another great British defence manufacturer to foreign ownership, through a takeover that would never have been approved by the Americans, French or Japanese, all of whom have taken steps recently to raise protections for their own defence sectors” (The Guardian).
The Americans, French, Germans and Japanese protect their defence industries – US government rejected Ultra’s Sparton bid in 2018 – but every sector in Global Britain is ripe for plunder.
In the journal Nature last year Denise Garcia (right) wrote: “As an academic who advises the United Nations on arms control and the military uses of artificial intelligence (AI) and robotics, I have long argued that nations should prioritize ‘human security for the common good’ over military spending.
“That means ensuring people can live to their full potential — economically fulfilled, politically enfranchised, in healthy environments and free from the fear of violence and pressing mortal threats such as climate change or pandemics . . .
She continues; “The real enemy is upon us. The frequency of heatwaves, droughts, forest fires, floods and hurricanes has quadrupled over the past four decades, and is rising.
“By 2050, almost 100 million people could be forced to migrate from coastal areas and other places that will become uninhabitable as a result of climate change (see go.nature.com/3agzsij)”. She adds that the following steps must be taken urgently to steer the world towards a safer course:
- First, stop new arms races. The world is already awash with weapons.
- Second, ratify and abide by the Arms Trade Treaty.
- Third, implement the 2015 Paris climate agreement
- Fourth, invest in the UN SDGs.
Unanimously agreed by nations in 2015, she stresses that the UN SDGs offer a road map for action that will deliver human security for all people and bridge the inequalities made so evident by the pandemic. Achieving the data-driven, evidence-based goals would also open up market opportunities, such as green economics, and create hundreds of millions of jobs.
As she comments, big armies haven’t helped countries to fight COVID-19 — precisely the opposite. The five countries with the largest defence budgets were unprepared and were hit hard. The United States, China, India, Russia and Saudi Arabia together accounted for almost two-thirds (62%) of global military expenditure in 2019, and US, Indian and Russian rates of infection are some of the highest so far, with the United States topping both lists.
Despite threats to human existence from climate change, biodiversity loss and a pandemic that’s devastating economies and paralysing societies, countries still recklessly buy destructive armaments.
Professor Garcia’s conclusion: “Governments should stop spending billions of dollars on weapons and protect citizens from the real threats they face”.
The head of Jupiter, one of Britain’s best-known asset managers, argues that cheap valuations will keep companies “vulnerable”. This will continue while the valuation mismatch between the UK and other stock markets persists. UK companies are clearly vulnerable.”
Some traditional asset managers claim the targeting of the UK market, which was hit by Brexit and then the pandemic, has left shareholders short-changed.
Legal & General, the UK’s largest asset manager, warned that the supermarket group should not be acquired for the “wrong reasons”, such as profiting from its property portfolio.
KKR, one of the world’s largest private equity firms, will set up a new team of five dealmakers to focus on buying British companies. The heads of its European buyouts business said it is to expand its operations in order to target more takeovers in the UK, as the record-breaking pursuit of British companies by private equity firms continues.
Unless more owners take Renishaw’s principled stand Britain will continue to be stripped of its assets and employees face an uncertain future.
The proposed sale of Morrisons to a foreign consortium hit the headlines recently and now the board of another successful Yorkshire enterprise – Wensleydale Creamery – is negotiating with Canadian based Saputo who bought the Dairy Crest cheese business in early 2019 for £975 million. Rumours of a takeover by Saputo emerged earlier this year but were denied by the Wensleydale board.
In November 1992 a management buyout took control of the creamery, then employing only 11 staff. The Wensleydale Creamery business now takes milk from 40 local North Yorkshire Dales farms and employs 210 staff. It manufactures and distributes a variety of speciality and regional cheeses, including Yorkshire Wensleydale cheese using its own unique cheesemaking starter cultures.
Canadian based Saputo, have announced they have agreed to purchase the Wensleydale Dairy Products business for £23 million subject to meeting UK regulatory requirements. If all goes to plan the deal will be completed on the 30th of July. It will add Wensleydale to its range of British cheeses, including Cathedral City and Davidstow cheddars. Richmondshire Today reports that locals are reassured by Saputo’s undertaking that there will be no job losses.
Wensleydale Creamery cheeses above: FT, “The tangy, crumbly treat made in the rolling hills of the Yorkshire Dales is now about to be gobbled up by Canada’s Saputo”
Ian Potter, who covered this news online, recalls that the creamery’s relocation to Hawes in 2015 was a huge success – particularly its popular visitor centre. He comments:
“Saputo recently acquired Bute Island Foods and it’s highly unlikely they have finished shopping in the UK Cheese market, who will be next to join the Saputo family?”
Founded in 1973, Renishaw has its headquarters near Wotton-under-Edge (above) as well as sites at Woodchester and Stonehouse. It has grown into one of the world’s leading engineering and scientific technology companies, with expertise in precision measurement and healthcare. It employs more than 2,500 people in Britain and manufactures in the UK, Ireland, India, Germany, USA and France. It has 79 locations in 37 countries supporting its global customer base.
To learn more about its wide range of products, go to Solutions (renishaw.com)
In March, Renishaw founders Sir David McMurtry and John Deer announced they would sell their 53% holding in the company. They sought a buyer who would respect the unique heritage and culture of the business, its commitment to the local communities in which its operations are based, and who would enable the company to continue to prosper in the long-term.
New owners would also be required to maintain local, high-quality manufacturing and jobs and to commit to substantial research and development spending: Renishaw spent £66.6m on R&D in 2020 – 13% of revenue for the year – according to its annual report.
However, in a statement released on 6th July, a company spokesperson said: “Having carefully considered the proposals which were submitted by potential acquirers, the board has unanimously concluded that none satisfactorily met the interests of all stakeholders. It has, therefore, decided to end the formal sale process.”
The Stroud News and Journal reports that Sir David McMurtry, executive chairman of Renishaw, and John Deer, non-executive deputy chairman, said: “Whilst the formal sale process did not result in a new owner for Renishaw, we are satisfied that it ensured a thorough and rigorous process that enabled us to evaluate a wide range of potential buyers. We remain fully committed to Renishaw and have indicated to the Board that we have no intention of selling our shares on the market for the foreseeable future”.
Earlier this month it was noted that post-Brexit/Covid: under-valued British companies had prompted a ‘buyout frenzy’.
Lord Myners (left), the former City minister, says: “Britain is open for business in the same way that a car boot sale is open for business,” (FT). He continued: “Basically any predominantly British-listed company, with one or two exceptions . . . is vulnerable to a takeover offer in a way that doesn’t apply elsewhere in the world.”
UK’s liberal attitude towards takeovers makes it an easy place to buy and restructure companies.
In France and Germany, strict labour laws make mass lay-offs difficult and governments sometimes take a firm stand against foreign acquirers (eg bid for Carrefour). The boom in private equity deals in the UK is also being driven by the relative cheapness of equities compared with other markets.
KKR’s Philipp Freise, left, and Mattia Caprioli hope to capitalise on the depressed valuation of UK companies (FT)
The private equity industry has been making larger and more frequent deals announcing approaches to 13 listed UK companies since the start of 2021, having made no more than five in the same period of any year for the past decade.
Myners says the vulnerability of listed companies is a result of shortcomings in the “rules of the game” of the UK investment management industry: an excessive emphasis by equity fund managers on short-term performance.
Detailed pay and environmental, social and governance (ESG) disclosure requirements and certain director liabilities are compulsory for listed companies in the UK. Ministers are consulting on plans to remove some of private equity’s advantages and apply some of those rules to privately held companies.
James Macpherson, former deputy chief investment officer of fundamental equities at BlackRock, said that this two-track system of highly-regulated quoted companies and unregulated private companies is enabling private equity groups “to plunder these assets that are weighed down by the weight of regulation and expectation” (FT).
It is feared that private equity wants to make a quick financial return in part by selling the assets of private UK companies, borrowing against them or piling on debt to pay themselves dividends, a phenomenon that is on the rise in the US.
Bargain basement buyout Britain 1: Morrisons takeover bid raises social, environmental and operational concerns
The Manchester Evening News reports that the Canadian/Japanese/American consortium bidding to takeover Bradford-based Morrisons supermarket chain have promised to be “good stewards”.
It is feared that under more remote and finance-centred management such a change would be for the worse
Morrisons directly employs 97000 people in its stores and – in addition – an unspecified number of people to produce more than half of its food ‘in-house’, owning fisheries, factories and farms, see Where We Work – Morrisons Farming:
- We source animals, produce and whole crops directly from over 2700 British farmers, some of whom have been supplying us for over 30 years.
- We make around a quarter of our own fresh food in 18 manufacturing sites and 495 stores, including bakery, seafood, meat, fruit & veg, flowers and chilled processed products.
- We own our own abattoirs with Colne being the largest 3 species abattoir in the UK.
- We bought Falfish, the family-owned Cornish supplier of over 80% of fresh fish and shellfish to Morrisons for over 16 years.
- We are probably the first British supermarket ever to own a fishing boat.
Morrisons produces and sells British produce at sensible prices and deals fairly with its staff and customers.
As Charles Allen, global retail researcher at Bloomberg Intelligence, quoted in the Retail Gazette said, it would be difficult to see what a new owner could do differently to improve Morrisons’ operational performance.
In addition to the immediate social and environment benefits mentioned above, Morrisons’ use of shorter supply chains makes it a pioneer in this emerging trend, redoing emissions for long distance transport.
Unlike Morrisons which is being approached by a ‘foreign trio’, Oxford based Nanopore, one of Britain’s most highly valued tech start-ups, will use an “anti-takeover” structure when it goes public so that it can fend off foreign bidders and become a national champion.
The Financial Times reports that the company had a breakthrough year after its DNA sequencing technology became essential in tracking the spread of Covid-19 variants around the world. Its devices have been used in 85 countries, and about 18 per cent of all coronavirus genomes globally have been run on them.
Nanopore sees itself as a British success story. Its co-founder and chief executive, Gordon Sanghera says: “What we set out to do at the outset is to build a global tech company that goes all the way from academic inception through to early commercialisation, which this country has a great track record of, but then usually companies like that get acquired.”
Sanghera was determined to avoid the fate of other high-flying British life sciences companies which had been bought by foreign rivals. To this end, he will retain “limited anti-takeover shares” so that he can veto a hostile takeover.
We read that such structures have been common in Silicon Valley, Slack and Peloton, whose founders will have control for 10 years, and Zoom, for 15. Palantir’s tilted voting structure is set to stay in place until the last of its founders dies.
Other UK listed companies, including The Hut Group and Deliveroo, have also tried to retain greater control for founders with dual-class share structures in recent months.
Could Morrisons fend off the private equity bids and adopt this approach?