Royal Mail investors stunned by takeover vote amid concerns Czech Sphinx buying cheap
- Shareholders sent the offer document on June 26, but the document was 140 pages long
A new storm of protest is mounting over the controversial takeover of Royal Mail by Czech billionaire Daniel Kretinsky.
The delivery company’s owner, International Distribution Services (IDS), has been criticised for “deliberately” making it difficult for hundreds of thousands of private shareholders to have a say in the £3.6bn deal.
Shareholders were sent an offer document on June 26, but the document was 140 pages long and it was unclear how they should vote for or against the deal. The information was criticized by shareholder rights groups as “unhelpful.”
A fresh storm of protests erupts over the controversial takeover of Royal Mail by a Czech billionaire
A spokesperson for the UK Shareholders Organisation said: ‘As an organisation we believe that the information IDS is making available is not so useful that you wonder whether this is a deliberate move by IDS and Royal Mail.’
ShareSoc, which also represents retail shareholders, added that it is “concerned that retail investors may struggle to know how to accept or object to the offer”.
The 140-page offer document was criticised for its “lack of clear language”, saying it was too “complex and legalistic”.
A ShareSoc spokesperson said: ‘We have been approached by retail investors about this and we stand ready to assist our members where we can.’
An IDS spokesman said: ‘The acquisition of IDS, as a UK listed company, is subject to the strict requirements of the Takeover Code. The offer document has been prepared in accordance with the format prescribed by the (code).
‘We do not understand why the UK Shareholder’s Association and ShareSoc question the materials, but we are contacting them to understand any specific concerns they may have.
‘We recognise that the formal offer document sent to shareholders is lengthy, complex and technical and understand that some shareholders may find the information difficult to digest.’
Takeover: Daniel Kretinsky is on a mission to complete a takeover of Royal Mail owner IDS
These concerns are heightened by the suggestion that Kretinsky, 49, who has been nicknamed the Czech Sphinx for his inscrutability, could acquire control of Royal Mail at a bargain price.
This follows Ofcom’s announcement last week that it may relax the Universal Service Obligation (USO) by making changes to the delivery of second class letters, which will then only be delivered every other working day and will not be delivered on Saturdays.
The USO obliges Royal Mail to deliver letters to 32 million households six days a week, for the fixed price of a stamp.
These proposals would save around £300m, suggesting IDS is worth much more than the 370p per share Kretinsky is offering, as he would be the beneficiary of the concession.
Kretinsky also refuses to rule out further price increases for stamps. First-class stamps are set to rise from £1.35 to £1.65 next month.
Under Ofcom’s proposals, first-class mail and parcels would still be delivered six days a week, but there would be no cap on how much Royal Mail could charge for postage. Kretinsky has pledged to keep the USO, but only for five years.
IDS’s board has backed Kretinsky’s bid, sending shockwaves through the City and Westminster. But investors holding at least 75 percent of IDS shares must give the takeover the green light.
Most of IDS shares are held by large institutional investors and Kretinsky is the largest shareholder with a 27.5 percent stake.
But many people, including current and former postal workers, also bought – or were given – shares when the coalition government privatised the service in 2013.
The share sale did not anticipate that the postal service – founded in 1516 – would fall into foreign hands. Royal Mail staff still own 5.5 percent of the shares.
About 700,000 people supported the privatization.
According to the British Shareholders’ Association, the information provided to shareholders is not easily accessible, transparent or understandable.
The spokesman said: ‘If IDS wants well-informed and engaged shareholders, they need to make the information more digestible. If they don’t want to do that, then their chosen approach is entirely justified.
“If this offer is according to the rules, then we should change the rules.”
The deal was put under investigation by the government last month over national security concerns. No date has been given for the outcome of the investigation.
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