PATIENCE WHEATCROFT: The human factor

PATIENCE WHEATCROFT: The human factor - If a novelist had drafted the plot for the Six Continents I saga, it could hardly have been better crafted. Here was a tale of David and Goliath brought up to date: lone entrepreneur attacks mighty corporation.

by Patience Wheatcroft, business and City editor of The Times
Last Updated: 31 Aug 2010

If a novelist had drafted the plot for the Six Continents I saga, it could hardly have been better crafted. Here was a tale of David and Goliath brought up to date: lone entrepreneur attacks mighty corporation.

The human dimensions were apparent. A previously apathetic chorus sprang into life, pointing accusing fingers at the villain. One man was fighting for his reputation; another desperately battling for the career advancement he had wanted for so long - and the future of many thousands could depend on the outcome.

Then there was the money. Billions of pounds of it, with personal as well as corporate fortunes at stake. And the drama looks set to continue over many months.

Entrepreneur Hugh Osmond spotted a worthy target in the sillily named Six Continents but left his attack too late.

The company once known as Bass had not delivered as expected for shareholders. After exiting from brewing, it had bought expensively into hotels and maintained a huge pub portfolio. Investors were getting restless but had been too lazy to make much of a fuss.

At the Bass head office, where Sir Ian Prosser had been in charge for far longer than Derek Higgs would approve of, it dawned that something should be done to cheer up the share price. Demerger would be the solution. Having fudged its image with the Six Continents label, the firm would divide into Mitchells and Butler pubs and Inter-Continental hotels.

Demerger would be expensive, with all the fees, but the board felt it would benefit shareholders. It would also benefit Richard North, the finance director, who finally saw his chance to become chief executive. He had been tipped to succeed Prosser as CEO of Six Continents, but the title went to Tim Clarke.

Whether the role actually went to Clarke is less certain. Prosser did not noticeably loosen his grip on the business and Clarke, a clever but not pushy individual, might have found it difficult to make his mark. This may be why he is happy to accept the job of chief executive of the smaller of the two businesses after the split. When Osmond seemed intent on scuppering the demerger plan, it was North who fought him most vehemently. He was fighting for the chance that many finance directors aspire to and few are granted: that of running his own company. Examples of those who have made the leap are few and have generally involved a change of employer. Archie Norman could not persuade Sir Geoffrey Mulcahy to give him a chance at Kingfisher, so he departed for Asda. Gerald Corbett, finance director at Grand Metropolitan, had to take the risky - step of moving to Railtrack as CEO. North's wish for some excitement had long been clear.

He had left accountancy to join the then Burton Group, and was instrumental in sorting out its financial problems. He then moved to Bass. But his enthusiasm for retailing persuaded him to align himself with Philip Green's potential bid for Marks & Spencer. This became so widely known that it may have counted against him when Clarke was instead appointed the new CEO.

Now North had his coveted role in his sights and he was not going to let Osmond deprive him of it. Yet some doubted whether he was the right choice to run a hotels business on this scale. He was seen as cool and contained, not made for the glad-handing of the hospitality trade.

Consciously or not, he has moved away from that image. His desire to see an independent Inter-Continental Hotels, with him at the helm, inspired a passion that imbued him with a warmth and colour. He was intent not only on contesting Osmond's numbers but also quelling doubts about his ability to run the business.

Osmond was eventually vanquished, but Six Continents had been given a real scare. Although shareholders had not agreed to his proposal, he provided a focus for the latent hostility to the company, and particularly its chairman.

This is said to have come as something of a surprise to Prosser. From the comfort of his elegant Mayfair headquarters, he had failed to pick up on the growing anger about what was seen as his arrogant approach.

Prosser has only a short time before he retires to demonstrate that that verdict was unfair. North and Clarke could have rather longer to show that they can be effective CEOs. That is, if bidders don't deprive them of their roles. There's plenty of takeover attention on the two businesses, but shareholders will want to see offers that beat the #5.2 billion put up by Osmond - who may even return with a bid for the pubs. This David needs to prove that he has heavier stones in his sling. The drama is not yet over.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Subscribe

Get your essential reading delivered. Subscribe to Management Today