Newspaper article The Evening Standard (London, England)

Bioglan Shows the Perils of Combined Roles at Top

Newspaper article The Evening Standard (London, England)

Bioglan Shows the Perils of Combined Roles at Top

Article excerpt

Byline: JOANNE HART

FOUR months ago, shares in the pharmaceuticals company Bioglan Pharma were trading at 429p.

Today they are worth 171/2p.

Founder chairman and chief executive Terry Sadler has stepped aside and the company has admitted to a raft of problems past and future.

There is one big difference between last July and now - the attempted [pound]540 million purchase of a portfolio of businesses from the US giant Bristol-Myers Squibb.

Then, the deal was said to be days away from completion. Today, Bioglan finally admitted the transaction would not go through.

The months in between saw the resignation of finance director Peter Johnson and financial advisers ABN Amro. The main point at issue was said to be the funding of the Bristol-Myers deal. Sadler was said to favour debt. The financial people preferred equity. Sadler owns about a third of Bioglan and has dominated the company since it floated three years ago. A large equity issue would have diluted his stake and perhaps his grip on the group. In the summer, both these notions were presumably distasteful to him. Now the edifice has crumbled, Sadler's stake is worth a fraction of what it was and his role is marginalised.

The company's fall from grace can be held up as a warning of the perils of ignoring corporate governance recommendations, which state that companies should not allow one person to combine the roles of chairman and chief executive.

The idea behind this guidance is that excessive dominance of one entity by one person is dangerous, particularly when a company is as deal-hungry as Bioglan. The Bristol-Myers acquisition would have been Sadler's 51st since flotation.

Such expansion makes it hard for shareholders to see what is happeningto the underlying business.

A good team of executive and nonexecutive directors is all important. …

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