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Salient. Newspaper of the Victoria University Students' Association. Vol 42 No. 7. April 9 1979

Brierley Justified

Brierley Justified

Dear Sir,

Your article, April 2 Salient, is the objective as far as the facts - quote "Brierley Is one of the biggest and most successful corporate raiders on either side of the Tasman".

But Why?

The example of the Christchurch company Beath's is a classic. The profits were low because the company was inefficient.

Either 1, The assets were not employed in the most useful way due to retail competition and / or 2. More likely, the management were poor businessmen / innovators / staff controllers and / or 3. Just as likely, the staff within the firm were letting the side down. From experience, in many firms about 1 in 5 people work hard, the rest make a half-hearted attempt to work occasionally. Students in holiday jobs will vouch that the general attitude to work in some firms in New Zealand is deplorable.

Beath's poor profits are a combination of I, 2 and 3 above. A very poor return to small investors in Beath's results, so Brierley intercepts. He offers a good price to the shareholders, a reasonably priced building to the DIC and takes a cut for his own shareholders. The advantage is that three groups have benefitted.

The argument against this practice is that the workers lose out. In the case given the DIC will surely be more efficient and employ less poeple. They will eradicate the "weeds" referred to in 3. above who were a drag on the business initially.

As an afterthought this does not always occur. Many firms appoint tough and innovative management and sales personnel to eradicate the "weeds" and turn losses to profits - hence avoiding Brierley. Also, the returns to share— holders' investments including capital gams, bonuses etc. has not exceeded 7% on average over the past decade. Banks and reputable business houses are far exceeding these returns.

Concluding if I/You were:
1.An investor in Brierley
2.An investor in Beath's
3.An investor in DIC
4.A hard worker
at the time of the takeover in Beath's, I/You would certainly have benefitted by the deal. Brierley is in effect performing a service.

Drawing of a man eating a hand

Yours,

Robert Knyvett