UPDATE: UK Cable: No Reason To Assume Future BP Takeover Bid

20th Jul 2010 15:06

(Updates throughout with more detail) By Laurence Norman Of DOW JONES NEWSWIRES LONDON (Dow Jones)--BP PLC (BP) is strong and there is no reason to assume there will be a takeover bid for the company, U.K. Business Secretary Vince Cable said Tuesday. "It's actually a very strong company financially, in terms of its cashflow and its balance sheet and there is no reason to assume that there will be a takeover," Cable said in comments to lawmakers. Cable also confirmed the new government is looking at reforming the U.K.'s takeover code and will consider possible changes once the independent U.K. Takeover Panel presents its report over the summer. Cable said he doesn't want to "prejudge" the process by commenting on whether he would back raising the threshold for a takeover from the current 50%. But "the system needs reform," Cable said. Cable said that among the options the government would consider as ways of preventing unwelcome takeovers is increasing the fees paid for a competition review, and increasing the notification procedure period to give more time for a takeover review. The Takeover panel is also currently looking at issues like the role of short-term investors, like hedge funds, in takeover decisions. However, Cable said it is important that the government avoid "nationalist" decisions, such as excluding foreign companies from investing in U.K. companies for spurious reasons. The previous Labour government promised to reform the takeover rules, with Cable's predecessor Peter Mandelson backing an increase in the threshold for takeovers. But Prime Minister David Cameron's Conservative party has been much less keen on shaking up the U.K.'s current takeover regime. Cable is from the junior Liberal Democrats coalition partner. Cable was also asked about the availability of bank lending for business. He said there are major challenges in ensuring firms can get access to credit at a reasonable cost, and said the government had "a range of instruments--sticks and carrots." He reiterated that the government is considering imposing new lending targets on the semi-nationalized banks next year but said there is a "genuine debate to be had" about whether that is the most effective way of increasing lending. And while he accepted that banks face significant constraints of their own with capital requirements rising, he warned that businesses currently fear that it will get harder to access credit in the coming months. Cable said it may not be the case that banks are turning away applicants but firms are "inhibited in applying [for loans] because they think they'll be turned down" or that the loan conditions will be too onerous. "There is a really big challenge ahead," he said. -By Laurence Norman, Dow Jones Newswires; 44-207-842-9270; [email protected] (END) Dow Jones Newswires July 20, 2010 10:06 ET (14:06 GMT)