Lord Hanson: a swashbuckling risk-taker

By Jeff Randall BBC business editor

Lord Hanson: capable of great flattery with a penchant for being deliciously indiscreet.

For a man whose name hung above the door, James Hanson was remarkably unsentimental about the company he had built from scratch.

As a champion of shareholder value, he believed that all assets were up for sale (or at least, should be). The trick was to buy them at yesterday's price and sell them at tomorrow's.

When challenged by an opponent of hostile takeovers about what he would do if a nasty predator made a bid for Hanson plc, Lord Hanson replied: "We'd send a limousine to collect him".

It was Lord Hanson's way of saying that the Darwinian approach he favoured for rival businesses applied equally to Hanson plc itself. In the commercial jungle, there was no room for compromise.

Corporate flagship

If ever an industrialist caught the Zeitgeist, Lord Hanson was that man.

Lord Hanson's analysis of Britain's economic problems was delightfully uncomplicated: the business sector had been allowed to ossify; boardroom dynamism had been replaced by complacency; defeatism had suffocated entrepreneurial flair

At the end of the 1970s, a dispiriting decade in which Britain was blighted by shopfloor chaos and poor productivity, Margaret Thatcher's Tories swept to power, determined to revive business confidence.

As part of her crusade, Mrs Thatcher (later Lady) collected around her a coterie of trusted corporate leaders who would bang the drum for free enterprise. One of these was Lord Hanson.

Along with his lifelong friend and business partner, Gordon White, Lord Hanson set himself the goal of creating a transatlantic industrial giant.

Encouraged by Mrs Thatcher's pledge to cut taxes and reform the trade unions, Lord Hanson succeeded brilliantly, turning a small transport business into a sprawling conglomerate that, for a while, was Britain's corporate flagship.

Opportunities

Always ruthless though never unscrupulous, Hanson and White became synonymous with the term "corporate raiders".

What is not open to question is Lord Hanson's success in America, a commercial arena in which very few British companies have survived, much less prospered

Such was their notoriety that Lord White (then Sir Gordon) was written into the script of the movie Wall Street, in which he was depicted as a cold-blooded money machine by Terence Stamp.

Lord Hanson's analysis of Britain's economic problems was delightfully uncomplicated: the business sector had been allowed to ossify; boardroom dynamism had been replaced by complacency; defeatism had suffocated entrepreneurial flair.

This malaise, however, created marvellous opportunities for those who were prepared to take risks and challenge convention.

Lord Hanson did precisely that, displaying charm and aggression in equal measure.

Strategy

Lord Hanson's fans say that he changed the corporate game for the better by his intense focus on shareholder value.

Once a company was taken over by Hanson, those at the top were usually sacked. This, he believed, released the energy of frustrated middle managers.

By focusing on cost reduction and cash generation, Lord Hanson brought about a startling revival in the fortunes of many companies that he acquired.

But critics claim that Lord Hanson's way of running companies led inevitably to business burn-out, because he had no long-term growth strategy.

In short, he and Lord White were simply quick-buck, slash-and-burn merchants.

Silver bullet

What is not open to question is Lord Hanson's success in America, a commercial arena in which very few British companies have survived, much less prospered.

Lord Hanson loved the US and acquired a partial American accent to complement the many operations he bought there.

Ironically, though, it was not the shark pool of America but a quintessential British company that stopped him in his tracks.

In 1991, after he and Lord White had bought a stake in ICI, then the bellwether of UK industry, the combined forces of the City establishment and Britain's industrial aristocracy closed ranks against them.

Fearing that Hanson intended to take over ICI and break it up, the company's board and its advisers launched a ferocious counter-attack, including a forensic examination of Hanson's accounting policies, tax strategy and directors' expenditure.

The silver bullet was that Lord White, a passionate fan of horseracing, had used Hanson company money to buy racehorses and had lost a few million pounds along the way.

Delight

In financial terms, this was no big deal; Hanson at its peak was worth £11bn. But for Lord Hanson and Lord White, who had invested so much reputational capital in delivering shareholder value, the episode was deeply embarrassing.

Thereafter Hanson, the company, went into gentle decline until 1996, when Hanson announced he was breaking it up into four parts: building materials, tobacco, energy and chemicals.

The golden days were over.

Hanson was a journalist's delight.

He was not only a swashbuckling risk-taker who did extraordinary things, he was also capable of great flattery and had a penchant for being deliciously indiscreet.

I shall miss him greatly.