By Chris Blackhurst Thursday, 31 May 2007

Sir Nigel Rudd

Qualifying early as an accountant, he was a corporate trouble-shooter at 24 and soon acquiring ailing businesses, building up conglomerate Williams Holdings only to dismantle it later. As chair of big names like Pilkington, Pendragon and Boots, he has pulled off big-ticket deals…

There's no doubting who the business­person of the hour is. In rapid fashion, Sir Nigel Rudd has sold off two of the companies he chaired - Boots and Pilkington; he has led another - Pendragon - to a merger; and at a fourth, where he's deputy chair, he's been closely involved in the biggest banking takeover in British history: of ABN Amro. On each occasion, he has made it his duty to extract the best possible terms, playing a high-wire negotiation game and usually winning. He has become Britain's corporate super-salesperson.

Years ago, I went to meet Rudd. He was boss of Williams Holdings, then one of the fastest-growing businesses in the country, and he was a coming business star. Friendly but edgy, he sat me down, then reached into his pocket and pulled out a piece of paper. He said it was from his PR agency, and it was all about me. The final line, he said, was: ‘Be careful'.

He looked at me, laughed, crumpled it up and threw it in the bin. ‘Now, what do you want to know?' he asked. It was quite brilliant - disarming yet putting me on notice at the same time.

I've met Rudd several times since. He never forgets what has been said or written about him. He makes sure he imposes himself - but in a mischievous way. He likes to answer a question with a question. ‘What do you think?' he'll say.

He's driven and egotistical, yet cares deeply about his image and reputation - which makes him a good listener. He wants to know what people think of him, where he stands. He's a bulldog, but one that likes to be stroked.

I'm seeing him in the London offices of Alliance Boots, formed by the merger of drugs wholesaler Alliance Unichem and high street chemist Boots last year. His office is at the back of the Boots flagship store in Oxford Street.

In a featureless presentation room, lunch is brought in on trays - chicken, vegetables, salad and Boots' own low-calorie fruit drinks. Rudd strides in, bristling with purpose. He was born and raised in Derby and still lives there (he also has homes in Belgravia and Portugal). His accent is flat and northern. He is stocky and he keeps himself well for his 60 years - he could pass for a prosperous farmer rather than the chairman of one of our biggest retailers (Alliance Boots), deputy chair of Barclays, chair of car dealership Pendragon and director of premier weapons supplier BAE Systems. Until recently, he chaired Britain's top glassmaker, Pilkington.

For the past year or so, Rudd has rarely been out of the news. He disposed of Pilkington to Nippon Glass of Japan; welded Alliance Uni­chem and Boots, and then sold the whole lot to Stefano Pessina, the Italian force behind Alliance Unichem; acted as kingmaker at Barclays by securing Marcus Agius to be chairman; was closely involved in the ABN Amro deal; and steered the expansion of Pendragon.

Last year, he had a hat-trick of deals on the go: the sale of Pilks, the Boots marriage and Pendragon's union with Reg Vardy. It upset those who question whether a single person can hold down more than one senior boardroom post. Indeed, the National Association of Pension Funds (NAPF) singled him out for a published case study on best board practice. ‘Box-ticking bollocks' was the reaction of a ‘friend' of Rudd to the report, sounding remarkably like the direct-speaking Rudd himself.

Now he's in the headlines again - this time for calling City analysts ‘stupid' in the Financial Times. They failed, he said, to see the merit in Alliance Unichem's tie-up with Boots. ‘When I did the Alliance Boots deal, everyone hated it. The greatest pleasure out of all of this has been the analysts. They are so stupid, most of them… They write all this stuff but they don't sit back and say healthcare is a growing business, people are getting older, they need more medicine. What I saw in Boots was a pharmacy, and what was more logical than merging with a chemist? And they didn't get it.'

Were analysts a waste of time? ‘Yes, mostly. I think the buy-side shareholders have a lot of talent in-house and I think analysts in investment houses are there to buy and sell stock or assist the sales team buying or selling stock. That is what buy-side people tell you; they read the analysis but they aim off from it.' You're still here, I say. He shakes his head, chuckling. ‘I'm a survivor. They haven't got me yet.'

Might they now? ‘Noooo. The whole thing has been blown out of all proportion. I've never understood retail analysts - how they concentrate on like-for-like sales. What's that all about? They'd been down on Boots all these years. Then we go and do a deal that transforms the business and they don't like it. What they don't like is that Boots was always covered by retail analysts and Alliance Unichem by healthcare analysts - they can't get their heads round that.'

They say he's not a retailer, so what is he doing, running Boots? He grins. ‘They're right, I'm not - I'm a businessman, I make money.' Look, he says, ‘if I was put in charge of merchandising for this store [Boots in Oxford Street], I wouldn't have a clue. I'm not paid to do that. I'm paid to get the highest value out of the business.' Combative, pugnacious, chippy - Rudd is all of those. But he's not so pig-headed as to risk annoying the City, where he enjoys acceptance. So he adds, smiling: ‘Besides, I didn't mean all analysts were stupid over Boots, just some of them.'

He's wealthy, he's close to retiring age, he's got his knighthood, he built up one company, Williams Holdings, and then showed the City a clean pair of heels by breaking it up, he has headed some of our biggest concerns, and he sits on various committees (such as the CBI's Boardroom Issues Group, an appointment that flies in the face of NAPF and its concerns). Where does it stem from, this hunger to succeed? ‘You know, we all meet very rich people, but you won't find many of them who know what it's like to be poor,' he says. His father was 50, his mother 41 when Rudd was born in 1946 - very late parents for those days. His Dad was a weights-and-measures inspector in Derby. ‘He'd been in the Depression in the Black Country, had been out of work, then ended up in Derby. When he retired in 1963, he was earning £20 a week.' There were, he says, no books in the house, ‘just aspiration'. His family were conser­vative, ‘with a big c and little c'. He's remained a supporter of the Tories all his life.

His eldest brother Graham is also a high-achiever. ‘He's hugely successful in property in the Midlands. He started out as a chartered accountant, like me. He's also gone gentry like me - High Sheriff for a year. I was Deputy Lord Lieutenant. Oh yes, I've done the DLL bit.' The guiding force was their mother. ‘She was hugely ambitious for us.' But it wasn't qualifications she was seeking. ‘She'd much rather we were in a profession and respectable. She didn't think university would add anything to that.' She used to work in an accountancy office and said she'd never seen a poor accountant.

He'd passed the 11-plus and gone to the local grammar school. He took his O-levels early and was, he says, in the Oxbridge stream when he left, aged 15 years and 11 months.

Rudd joined a firm of Midlands accountants as a trainee. ‘I'd always been good at maths so I found the work easy.' The pay was welcome, too. ‘It opened my eyes to what it meant not being poor. That's not to say we ever went hungry - I mean "poor" as a relative term.'

The firm's clients were drawn from across Midlands industry - construction, foundries, engineers. ‘I was lucky in that I got to be doing interesting work early on. I observed who was successful and who wasn't - and why.'

He was a qualified chartered accountant before he was 20, the youngest in the country at the time. Doing things sooner than anyone else is a theme of his life. He was also spurred to marry Lesley at 22 (they have three children and four grandchildren) and went on to make his fortune before he was 30. ‘I do everything early and I get on with it,' he declares defiantly.

On the day he qualified, he told the employer who'd trained him that he was off, to work for an engineering company. One of the tasks there was to negotiate with London & Northern (L&N), the engineering group headed by Scottish entrepreneur Jock Mackenzie. His opposite number was Brian McGowan and they became firm friends. At 24, Rudd was a troubleshooter, ‘advising businesses and sorting them out'.

L&N had a house-building arm in South Wales, which was struggling. Rudd said he'd take it off their hands. ‘I never wanted to be an employee. I was always a flitterer, I was never interested in the boring bit of running a company. I was always interested in the angles - and there are always angles, aren't there?'

He moved his family to South Wales. ‘Listen,' he says, deadly serious, ‘I made a lot of money there.' With Rudd, the boasts are based on fact and contain self-deprecatory remarks - hence the one about ‘going gentry'. When he says ‘I'm a member of Brooks, you know', it's disbelief as well as pride speaking.

On the face of it, he's a fully paid-up scion of the Establishment - a Captain of Industry if ever there was one. Except he isn't. He's too maverick, too down-to-earth for that. Every weekend, he's back home with his mates, playing golf and shooting (he lost an index finger in a shooting accident) or watching Derby County. His friends poke fun at him and he gives as good as he gets.

Rudd realised that the key to making a profit in house-building lay in acquiring the land. He amassed a land bank and then did a deal with a builder - Rudd sold him land and got 27% of the value of the finished house. He found himself with time on his hands. ‘That's when I learned to play golf.' Today, he plays off a respectable 11 handicap. ‘I don't like losing,' he growls.

With money coming in from his land sales, he ‘decided to do something'. He'd kept in touch with McGowan, just returned from Hong Kong and on the lookout for ideas. ‘It was 1981-82. UK engineering was in recession and there were hugely cheap engineering businesses around. We'd seen what Hanson and BTR were doing. We wanted to start a conglomerate.'

They paid £400,000 for control of W Williams Holdings, a foundry in South Wales. Over the next decade, Rudd and McGowan built it into a giant. At one stage, Williams Holdings was into fire extinguishers, owning Kidde; household security via Yale and Chubb; and building products with Polycell, Rawlplugs, Cuprinol and Crown Paints.

Along the way, Williams closed factories and laid off staff. But, says Rudd, the tough calls were not usually his or McGowan's. Their job was to get the right people to run what they'd bought. After that, it was up to them. Selecting the best is ‘something I'm absolutely ruthless about.'

In chairing companies today, he doesn't run the business but finds someone who can. ‘My priorities are always to get good people who know what they're doing and to impose tight controls.' He claims to have a sixth sense if there's a problem. ‘I can tell from the body language of the executive team. It's intuitive.

Rudd has also displayed the cunning of a politician who puts the voters first. He has made a point of looking after those who can hire and fire him and always makes sure the institutional shareholders are happy. ‘The trick of a conglomerate - whether it was Hanson, BTR or Williams - was to make the market believe there was a premium in the share price for management. Shareholders had to believe the value quoted on the market was better than the sum of the parts.'

But he saw early on that the conglomerate idea was unsustainable. He could see that ratings were slipping and opinions were being revised. ‘We were killed because analysts got smarter,' he says, choosing his words deliberately (you see, they can't really be stupid). ‘They started to value organic growth, not acquisitions growth, which is exactly how it should be.'

Also, private equity was starting to take off and it afforded a much more tax-efficient framework for backing and owning disparate businesses. Rudd resolved that he would not be the last but the first to break up his conglomerate. So Williams was dismantled.

Does he ever regret it? ‘No. I'm not somebody with a lot of regrets.' Of Williams Holdings, only Pendragon remains in his portfolio. It's the one for which he has most affection. ‘It's the biggest car dealership in the world outside the US. It has come up on the blind side of everybody - it's a fantastic business.'

With time on his hands again, he decided to do what he enjoyed most. ‘I went plural before Allan Leighton [the self-styled king of multi-directorships], you know. I realised I like being chairman because it enables me to be involved enough to get satisfaction but not have to get up at 7am for a meeting. Being chairman is more me - I'm better on strategy and deals. I see myself as a coach, as a supporter of good people.'

He accepted the chairs of East Midlands Electricity and Pilkington and followed them with his other posts. Of these, it's Boots and its relationship with Pessina that put him on the spot. The analysts didn't rate what he did and he can't let go - he's a dog with a bone. They forget, he says, what a mess Boots was in. It had a new, smart chief executive in Richard Baker but it had become that dreaded high street basket-case: a ‘legacy' retailer living on its past. ‘Whenever Boots was mentioned it was "troubled" or "beleaguered" - it wasn't an exciting place to be.'

All sorts of initiatives had been tried down the years - a push overseas, the expansion of ‘leisure' and of cookware, the addition of dentistry, chiropody and opticians - all to no avail. ‘It wasn't through want of trying,' says Rudd.

The board had various options. ‘We could throw in the towel and sell to venture capitalists and see if they could do any better with it. We could run it as a public company for cash for investors - paying good dividends and making share buybacks, but not going very far and attracting good people to come to us would be difficult. Or we could play to our name as a pharmacy and go into Europe and buy.' What was needed was a partner in Europe. Rudd was impressed by Pessina. ‘Stefano had a clear idea of a healthcare/pharmacy operation, built around the strength of the Boots brand.' The logical step was, he says, ‘to do a Stefano' - Pessina had expanded rapidly from his Italian base, buying pharmacies across Europe - ‘but then we thought, why not merge with him?'

But rather than charge headlong into teaming up with Pessina, he held board meetings and set up working parties to take the proposal apart. ‘More and more, the answer was that it was good for Boots. The top 15 executives looked at it and said there was no downside - this would create, at a stroke, a European powerhouse business.' Rudd gives a self-deprecating laugh. ‘Mind you, I always knew it would be a difficult sell.'

There was residual affection for Boots in Britain, where it was a household name; it was part of the fabric of Nottingham; it was dripping with history - yet here was Rudd merging it with a relatively unknown Italian firm. What's more, Alliance's dominant personality, Pessina, had his long-time mistress on the board: Ornella Barra, in charge of Southern Europe. ‘That was never an issue for me,' says Rudd, ‘Have you ever met Ornella? She's very bright, brilliant at her job.'

The merger was struck. The ‘stupid' analysts weren't keen, but so be it. Rudd raises his arms: ‘I was interested in creating value and this deal had a huge value point to it.'

As if to prove his argument, less than a year later, Pessina offered to buy the whole lot for £1.8 billion more than the City said it was worth at the time of the marriage. ‘Stefano came to me with a letter from KKR [Kohlberg Kravis Roberts, the US private equity group]. It said they'd like to buy the business, with Stefano.'

Was he shocked? He laughs. ‘I said I'd like to sleep on it.' But he adds: ‘I knew immediately there was no rowing back. How could I have said "take the offer back and can we start again?".'

Rudd's aim, he realised, was to extract the best price for his shareholders. Why did Pessina do what he did? ‘He couldn't do with all the half-yearly, quarterly reporting. If a major acquisition came up it would have to be approved by shareholders and that wasn't the way Stefano worked.' Those analysts again.

Which is better, public or private? ‘It doesn't bother me so much as a chairman but there is a growing issue as to how we treat our public chief executives. Why be one? If you're successful, you don't make that much, and if you're unsuccessful, you're publicly ruined or quietly fired.'

Although Rudd saw the implications of Pessina's letter, he was acutely aware that the conflicts of interest it created could damage him. ‘All I have in business is reputation and integrity - that's what I hope Nigel Rudd stands for.' If he wasn't careful, the Rudd brand could be lost.

‘I immediately moved to keep the management away from KKR and I quarantined Stefano, Ornella and the other decision-makers away from the business.' Interest from Guy Hands' Terra Firma private equity firm pushed up the price. In the end, Hands didn't bid but Rudd emerged with an £11.1 billion price. ‘From £6 billion for Boots to £11 billion in 18 months - that's not bad, hey?'

It's not. So what will he do next? ‘I dunno. I'll have been working 45 years in December. I'm going to sit back,' he says, then adds, with eyes twinkling: ‘A lot of head-hunters have already been on, saying, would you, could you, are you interested?'

Whatever his next chairmanship is, it must satisfy one rule: ‘It has to be interesting. I'm not interested in working with people I don't like.'

The joke in the City, I tell him, is that wherever it is, the shares are a ‘buy' because he will be selling the business. ‘I hope I create such value that people see it and that I sell because a business is great, not because it's crashed.'

An assistant comes in with a piece of paper. ‘I've got to go, something has come up,' he tells me. Will he share it with me? ‘No way,' he laughs. (It turns out later it's the Boots pensioners asking that KKR find another £1 billion to plug the pension deficit.) Before he goes, though, he has one question for me. ‘Am I in, in the City?' It's an odd thing for the deputy chairman of Barclays to ask, but endearing. For all his success, he still feels an outsider - which in truth, with his background and bluntness, is what he'll always be. But he wouldn't want to be an insider. He likes to have one foot in London, the other in Derby. He likes to have a go when it suits him, to accept the plaudits but to keep his distance.

The modern City is inclusive and meritocratic. People are now judged by results. So my answer is: ‘More than you realise.' He smiles and shakes my hand. That's good enough.

Four big challenges facing Rudd

1 To secure another position that provides him with the high-level interest and industrial profile he seeks

2 To grow car dealership Pendragon

3 To continue to be unafraid of speaking his mind - especially where the City is concerned

4 To reduce his golf handicap>

Rudd in a minute

1946 Born 31 December, Derby. Educated Bemrose Grammar School

1962 Trainee accountant, qualifying at 20

1970 Divisional finance director, London & Northern

1978 Chairman, C Price & Sons

1982 Chairman, Williams Holdings

1994 Chairman, East Midlands Electricity, later becooming chair of Boots, Pilkington and Pendragon, and deputy chair of Barclays

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