The previous Conservative government in the UK sold off AEA Technology, formerly part of the UK Atomic Energy Authority, too cheaply, according to a House of Commons public accounts committee report. The committee backed a National Audit Office analysis which criticised civil servants in the Department of Trade and Industry for inadequately supervising Cazenove, which sold shares in AEA Technology to three of its own companies.
The shares first went on sale in September 1996 for 280p. Within the first day’s trading the price had risen to 323.5p and since then the share price has risen significantly faster than that of other companies in the same sector. In May 1998 shares stood at 777.5p each. The public accounts committee estimates that the UK taxpayer effectively lost £160 million ($260 million).
The committee argues that the sale should have been phased and that there should have been closer control of Shroeders the financial advisors to the DTI, as well as Cazenove.
“The committee questions the department’s view that the sale can be regarded as a success,” says the report. “The larger than anticipated rise in share price on the day after the sale, and the subsequent substantial increases over and above the increase in share prices of companies in the same sector suggest that the department could have obtained more value for the business they sold.”