Malcom SurrySix generations of Keswicks have spent well over a century successfully fending off upstart raiding parties, as well as surviving sundry wars.
Anchors aweigh! The good ship Jardine Thistle sails blithely on.
Avast and belay you lily-livered land lubbers. Lieutenant Weatherall! Load the aft guns and give 'em a blast up the rigging." "Aye aye, Captain Keswick." Boom ... Crash! The good ship Jardine Thistle has won the battle of Bermuda, fending off a salvo of six corporate resolutions from the US battle cruiser Brandes, which was fighting to clear the way for a predator to seize the rich cargo.
California-based Brandes Investment Partners, headed by 38-year old Brent Woods, claims to have netted 8% of Jardine Matheson's share capital. It assembled a crew of other mutinous shareholders, including the bald-pated Mark Mobius and his Templeton Emerging Markets Fund. They are deeply unhappy about the lacklustre performance of Jardine Matheson in general, and its eccentric ownership structure in particular.
THE BRITISH KESWICK FAMILY AND THEIR ALLIES CONTROL the Hong Kong trading house through a combined shareholding of less than 10%. This conjuring trick is possible because Jardine Matheson owns 61% of holding company Jardine Strategic, which in turn has locked up 40% of Jardine Matheson. For good measure, the cross shareholding delivers effective control of the giant Hongkong Land. A coterie of seven directors, including Lord Powell of Bayswater, forms the majority in the richly panelled board rooms of both companies.
It was amid the surreal surroundings of the pale pink Hamilton Princess hotel in Bermuda last month that the Jardines men were obliged to defend what many regard as the indefensible - or risk being forced to walk the plank.
It helps to have a family united by tradition. The chairman is 62 year-old Henry Keswick. He and brother Simon are the great-grandsons of William Keswick, who was a great nephew of William Jardine, who founded the company along with James Matheson back in 1832. Their second cousin ,Percy Weatherall, was appointed managing director, or "Taipan", earlier this year. His family owns almost as many shares as the Keswicks. When it came to the proxy fight, the family had the fire power to blow the enemy out of the water, lodging 75% of the votes in favour of the status quo.
Six generations of Keswicks have spent well over a century successfully fending off upstart raiding parties, as well as surviving sundry wars. How then did it come to pass that they found themselves holed up in a seaside hotel being harangued by, of all people, a bunch of Americans?
For decades, the Jardines name was synonymous with good management. The messenger boys at the "Hong" wore white uniforms and pillbox hats emblazoned with the thistle emblem. Along with the Hongkong Bank and the Jockey Club, Jardines pretty much ran the former crown colony. The reigning Taipan was automatically a member of the old Executive Council. In keeping with its compradore past, the company comfortably straddled the border with mainland China. But by the late 1970s, cracks appeared in the edifice. Earnings became unstable, mistakes were made, and the venerable institution began to be outgunned by feisty locals, notably real-estate baron Li Ka-shing.
Jardines caused a furore in 1984 when, at the nadir of relations between Britain and China over the future of Hong Kong, the company shifted its domicile to Bermuda. Beijing was furious and accused Britain of supporting the move as a negotiating tactic. It was nothing of the kind of course. Jardines just thought it might come in handy one day to be incorporated on an island, 570 miles off the coast of North Carolina, which is the oldest self-governing territory in what used to be the British empire, and built its fortunes on the slave trade and rum smuggling. Sure enough it did.
IN 1988, A GROUP OF PROPERTY BILLIONAIRES LED BY LI KA-SHING BUILT UP a big stake in Hongkong Land and threatened to launch a hostile takeover bid. In what amounted to greenmail, the Jardines camp paid HK$2 billion to buy out the syndicate's shares. The interlopers promised not to try again for seven years. Twelve months before the moratorium ran out, Jardines caused an even bigger fuss when it uprooted the listings of all its quoted companies and transferred them to Singapore. They did not like the Hong Kong Takeovers code, so they prevailed upon the authorities in Bermuda to write them one of their very own. The shares in the Jardine Matheson stable are traded in London and Singapore, but they have not flourished that far from home. Jardine Matheson is languishing at not much over US$4 - almost 30% below the estimated value of the assets per share.
The American rebels must have realised they were dealing with tough hombres. "We shall not take any action for the sake of bringing about a short-term increase in the share price," barked Henry Keswick. The Brandes boys have retreated to their San Diego base to ponder their next sortie. That is likely to take place before the courts, in the US, or anywhere else that thinks it might have jurisdiction. Corporate lawyers for both sides are cheerfully rubbing their hands.
Malcom Surry is a one-time Fleet Street journalist, a former securities-markets regulator and Hong Kong stockbroker.