Andrew Regan’s bid to take over the Co-op hit the buffers amid
court room drama this week. But it might have been a different story had
press leaks not alerted the CWS to his plans.
The collapse of Andrew Regan’s pounds 1.2 billion takeover bid for the
Co-operative Wholesale Society (CWS) last week marked the beginning of
the end of one of the City’s most engrossing soap operas.
Regan’s assault on the Co-op has been characterised by what one observer
called, ’some very dirty PR tactics indeed’. Along the way there have
been questions in Parliament, videos of Co-op employees giving secret
files to their rivals, multi-million pound payments to mysterious
off-shore companies, court injunctions and the condemnation of a judge
who branded Regan’s antics as ’iniquitous’.
From the start the whole campaign was dogged by leaks. Regan’s original
PR strategy was blown off-course when the Sunday Times ran a story
revealing Regan’s plans to bid for parts of the Co-operative Society’s
empire in early February. From then on, Regan and his team were fighting
a rearguard action.
Not that Regan lacked expert PR advice. On the consultancy side there
was David Bick a director of Financial Dynamics who worked virtually
full-time for Regan’s company Lanica Trust on the deal. Meanwhile former
Daily Telegraph City diarist Damien McCrystal took care of the PR for
Galileo, the vehicle created to make the bid for the CWS.
While the endless speculative newspaper stories appeared to be helpful
to Regan’s PR team, they prevented Regan from targeting the people he
really wanted to. Most important of these were the members: ’the
grannies living on council estates who didn’t even know they owned the
Co-op’, as one source put it, who were to be targeted with a massive
regional media campaign.
According to George Pitcher, chief executive of PR firm Luther
Pendragon, who worked informally, and uninvited, on the Co-op side, the
spin from the Lanica/Galileo camp was that the Co-op people were ’a
bunch of dinosaurs’.
But they could not have been more wrong.
The Co-op fought off this bid with a ferocity that few would have
thought possible. And they were helped, inadvertently, said one source,
by people within the Regan camp ’who didn’t understand the importance of
keeping their mouths shut’.
Lanica’s merchant bank, Hambros, apparently got the jitters after MPs
put down an Early Day Motion motion to the House of Commons regarding
Regan and possible financial scandals and called in Lowe Bell Financial
to act for Galileo. In a bid to clamp down on the now rampant press
speculation Lowe Bell - which was also advising Nomura International,
the main backer for the deal - took over as the main source of press
Also on the team was lobbying firm GJW, which was advising both Galileo
and Allied Irish Bank, a potential buyer for the Co-op Bank.
Meanwhile the Co-op set up its own war cabinet led by director Alan
Prescott and Brian Keelan of merchant bank SBC Warburg. It was Keelan
who was behind the surveillance operation that caught CWS director Allan
Green handing documents to Regan in a pub car park (which, ironically,
contained details of the Co-op’s defence strategy).
The PR team was led by Bill Shannon head of corporate relations at the
CWS together with financial PR firm Keith McDowall Associates, whose job
was to counter the acres of largely favourable press coverage Regan was
The Regan team finally threw in the towel last week after an injunction
taken out by the CWS banned Regan, his associate David Lyons and their
companies Lanica and Galileo from making use of the confidential
information they obtained from the CWS. It was at this stage that Lowe
Bell’s work for Galileo effectively ceased.
On Friday Mr Justice Lightman extended the injunction to include Hambros
and another 17 City firms to whom the information was circulated.
The successful defence of the CWS led one Regan sympathiser to say: ’I’m
really impressed. They defended the indefensible.’
The bid may be over but for those who were involved with Regan the
fall-out continues. The Co-op launched criminal proceedings against the
two Co-op directors accused of helping him, Allan Green and David
Chambers - both of whom were sacked last week. It also launched civil
proceedings against Regan, Lyons and their advisers.
On Monday Hambros and Regan’s law firm Travers Smith Braithwaite were
forced into a humiliating climbdown when both resigned from Lanica and
issued public apologies to the CWS.
Perhaps, as Pitcher says, Regan was naive to think that he could get
away with using moles within the Co-op. As for his advisers, Hambros
chief executive Chips Keswick himself admitted that the ’judgment
exercised’ in the case had fallen ’well below our standards’.
Keith McDowall also raises questions about the role of Regan’s PR
advisers, although the truth may be that for all the talk of PR people
sitting in the board room alongside the bankers and lawyers, in this
case they were out of the loop.
If the case illustrates one thing it is the danger of overkill. Many in
the industry believe that had the bid come as a surprise, the CWS may
well have been looking at a different scenario this week.