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How Stop Huntingdon Animal Cruelty took on the finance world
FOLLOWING AN UNPRECEDENTED campaign during 2001 and 2002, animal
testing company Huntingdon Life Sciences (HLS) has been forced to
withdraw from the London Stock Exchange and failed in its attempt
to re-list on a US stock market, due largely to the campaigning
of Stop Huntingdon Animal Cruelty (SHAC). SHAC have stepped into
the world of the stock market, taken the business people on at their
own game, and are now finding that a great way to attack a company
is from the angle of the shareholders and making life impossible
for a firm in the fickle world of the stock market. No you're not
reading a page from the Financial Times - put your executive toys
away and read about how to bring your favourite company to its knees.
We have seen the share price of HLS crash totally. The company
has not been able to prevent SHAC influencing shareholders and driving
away most of their financial backers. For a publicly quoted company
to maintain support from investors and management wages it is dependent
on the share price rising, and to tackle this involves using the
system against itself: The strength of a company is measured by
its share prices, and this is a significant way it raises cash,
especially if it is in serious debt or needs to expand. There is
a close connection between debt and share price, as banks and other
institutions will offer loans and bonds based on it. If the share
price subsequently falls the creditors get worried, and a significant
fall could see creditors demand their money back.
So with HLS already in turmoil, with their main creditors NatWest
Bank under an all out attack, and with the share price having fallen
from 350p to under 200p, it was time to attack: First tactic was
to go after shareholders - lists of which can be obtained for any
public company from Companies House. There are two types of shareholders:
the small, private investor and the "institutionals" like
investment and pension funds and banks.
The city institutionals were targeted first. Using the negative
publicity surrounding HLS, activists staged public demonstrations
outside offices, and stormed PR events to disrupt and embarrass.
Taken back by the storm of negative publicity many of them sold
up, stating the bad performance of the share price as their reason
for getting out. This served to make the shares even more unattractive
and fall lower.
Next the small shareholders: Names and addresses were posted on
a website so everyone could see their association with the animal
torture company. Local groups took to dealing with the shareholders
in their area, with all sorts of amusing, inventive and effective
tactics. The result was electrifying and the media went nuts. Shareholders
freaked as it dawned on them that the animal rights movement now
knew exactly where they were. They started getting protests outside
their homes, inundated with mail and calls, even visits from the
ALF. They sold in droves and the share price continued crashing.
It hit the desired vicious circle; the more the share price fell,
the more it encouraged people to sell, bringing it down further.
Naturally, those selling the shares had to find buyers, which was
happening because the shares were being sold at a pittance of their
previous value. Hence the second phase of the operation, going for
those promoting the buying and selling: stock brokers and market
A stock broker is the company that provides a small shareholder
access to stock markets. A market maker is a company that takes
on a stock to provide a market in it, facilitating the stock brokers
and encouraging liquidity. The key buzzword here is 'liquidity',
roughly how easy it is to buy and sell shares in a company, and
associated with the volume being traded. Generally large volume
of trades pushes up the share price, creating a market for them.
An illiquid stock is one that generally falls in value because it
hard to trade and there is thus little volume of shares.
HLS were about to lose liquidity: From the London Stock Market,
it was simple to find the brokers and market makers. Shareholders
were suddenly told by their brokers that they would no longer deal
in HLS shares, and those that held their shares in 'nominee accounts'
by the brokers were told to sell up or take them elsewhere. The
market makers likewise rapidly disassociated themselves, with the
The name HLS has become a joke in the City of London, their share
price was stuck between 2 and 4p (less than their nominal value),
valuing the company at around 9 million (much less than the value
of its actual assets), and there was no chance of the shares ever
recovering. The City works pretty much on rumour and gossip, so
plant a story and it can rapidly spread, even causing panic. The
City got dose after dose of this until everyone knew that HLS was
Meanwhile, SHAC USA deftly removed all eight of HLS's American
market makers using similar tactics. The share price for the 'ADR'
system which allowed limited trading in the shares in the US also
collapsed, and they fell off all US stock markets until they reached
the 'pink sheets' - where shares go to die. Many of the big institutional
investors will not invest in shares that have ended up on the pink
sheets. More investors were frightened away.
Desperate to recover, HLS planned to move their shares to the US.
They took their shares off the London Stock Exchange, arranged a
dummy company, Life Sciences Research Inc (LSR), and moved all the
shares to the new company. But there was a hitch: just as a deal
with a market maker was formalised with LSR, an article appeared
in the New York Times profiling the aggressive campaigning tactics
of guess who. The market maker promptly pulled, before a single
action against them had occurred. HLS managing director Brian Cass
is quoted as being "confounded and frustrated"!
Eventually HLS scraped the bottom of the barrel and found a small
Colorado market maker with fraud convictions called Spencer Edwards
to take them on. But just when it looked as though the transition
to the new name was going well, several shareholders homes were
invaded, and offices occupied and soon after Spencer Edwards faxed
through that they were getting out. LSR shares never saw light of
day. It was a brilliant victory for SHAC, and an outright disaster
Meanwhile the majority of their shareholders, the small UK investors,
have been left stranded; their names are up on the website, and
they are facing greater costs to get their brokers to deal in US
shares. Under pressure from SHAC, HLS has managed magnificently
to shaft its backers and shareholders.
What now for HLS? The LSR deal to move to the US is in tatters.
They are still essentially a private company with no share price,
a lot of angry shareholders and duped creditors, upset that the
shares they swapped their debt for are pretty much worthless. SHAC
met them on their financial territory and is winning this crucial
battle in the drive to close them down.
For SHAC see http://www.shac.net
or ring 0845 458 0630