OUTLOOK: BTR needs new deals

BTR is not a company fond of the cliches of the corporate governance debate, and until last autumn it could afford to be loftily dismissive of it all. Success is its own reward for shareholders, and never mind the Cadbury guidelines.

But with the shares down a quarter in the last few months, it is amazing how fast attitudes have changed. A fortnight ago Norman Ireland, the chairman, was talking of taking at least three months to decide on the principle of whether to appoint outside non-executive directors for the first time. This week BTR has made a firm decision that it will happen, alongside the appointment of a new chief executive.

Have the institutions been along to complain? Even if they haven't, they have certainly made their feelings known by selling the shares, so BTR may be rushing to mug up on Cadbury as a long-overdue piece of investor relations, to forestall tougher actionlater.

The sharp fall in BTR shares towards the end of last year after the company revealed it was suffering from pressure on margins certainly shocked senior executives. They were unprepared for such a harsh reaction.

It may have been overdone, but it is easy to see with hindsight why a bit of bad news had such a profound effect. It crystallised other concerns already around the market about where BTR was going.

How would a company skilled at the financial engineering of large acquisitions cope with tighter accounting standards? Are the days of the acquisitive industrial conglomerate over? And has the management under Mr Ireland's chairmanship got the same grip on the company as the old regime under Sir Owen Green, who built up BTR?

The fact that a chief executive has had to be brought in from outside for the first time is surely an acknowledgement that the management has a missing layer of talent.

Alan Jackson, the retiring chief executive, may have had many talents but he was far from a great communicator. BTR has made most of the mistakes in the book in dealing with the City in recent years, including the cack-handed way it presented the news about margin pressure.

With the company's strategy and succession increasingly a mystery to its own shareholders, the absence of genuinely independent non-executive directors began to be a real problem. The power of non-executives may be overrated but they do bring some comfort to shareholders that a management is not going off the rails.

Ian Strachan, the new chief executive, will not, however, get by on good investor relations alone. BTR needs new deals, or it may become somebody else's target.