DISCUSSION Commercial logic is somewhat lacking

by Luke Robinson _______5th May 2014

by Mr Mark Goyder

Sir, I am intrigued by the investor logic suggested by your report (May 1) that “other shareholders said that the City would not be influenced by concerns over what a deal would mean for AstraZeneca’s 7000 employees or the UK’s life sciences sector. We are not protectionist like the French. Commercial logic and price determines whether we back a deal or not.”

Institutional investors owe their fiduciary duty to their clients.

The wealth created for those clients depends on the creative abilities of a company’s employees. And clients will have corresponding investments across other companies in the life sciences sector. So if fund managers are truly promoting their clients’ interests, it is hard to see how they exclude the impact either on employees or on the sector from their assessment of “commercial logic”.

Unless, of course, those fund managers perceive commercial logic not as long-term wealth creation for their clients and beneficiaries, but the opportunity to crystallise immediate gains that help companies in their marketing and individuals in their performance bonuses.

Mark Goyder, Founder Director, Tomorrow’s Company

Published FT letters, May 5 2014

Read it in the FT here