Member Info for Hounddog10

The takeover is being effected by way of a contractual offer. If you vote in favour of the bid your shares will, as Dowsie says, effectively be automatically sold and you will receive the £3.60 plus any dividends (provided you hold the shares at the relevant record date for dividend entitlement). If you don’t vote in favour then your shareholding is maintained and you will end up with shares in an unlisted company. Few people would want that.

The exception to this is if VESA gets 90% acceptances. At this point it can use Companies Act provisions to “squeeze out” ie compulsorily buy out recalcitrant shareholders at the bid price. The reality is that it won’t want minority shareholders and if it does not get to the 90% immediately will likely make further offer(s) to get to the 90%.

The CWU should probably take advice on this and get something out to their members.

If the takeover is being done by a Scheme of Arrangement (the most common method) and the bid was approved ALL shareholders are bound even if they voted against or did not vote and are compulsorily bought out. VESA has retained the option to switch to a Scheme but that is really just a standard fallback so is not necessarily likely.

There is quite a way to go yet to complete the offer. A good deal of anti trust clearances needed across a number of countries (see Appendix 1 of RNS). They don’t have much in the way of irrevocables (only management) and no intents to vote in favour. Although, they are doing it by contractual offer and so only need 50% plus a vote to get control they have set the required threshold of acceptances at 75% (so that they can delist).

Looks like Emma Gilthorpe is losing her job - new RM board to come in. At IDS level Seidenberg and CFO keep their jobs.

The £5bn bid appears to be enterprise value ie includes debt.

Sims - yes, you summarise it well.

Neeed = needed

I now rather expect that it was the going concern statement that held up the financials. It is the sort of thing that auditors obsess about. The Guardian article does not grasp that it is a rather technical issue. Sure, there is as normal, a change of control clause in the facility agreement which means that the facility will need to be renegotiated on acquisition or replaced but the facility is undrawn and only needed in a downside scenario. If Kretinsky buys he has the resources to provide any neeed funding.

It is all very bullish in the wording and they clearly have a lot going on. Daventry cleared almost a 1m parcels in one 21 hour shift. If they were to replicate that across a whole year (admittedly unlikely) that might be processing some 30% of RM domestic parcels.

One point that does not come out is letters. Letter volumes have declined 9% for the whole year.. It was 8% for the nine months to 31 December 2023 at Q3 (was 8% I think for 2022/23). Of course thes numbers imply a much bigger drop in the Q4 three months. I make it over 12% with no material rise in revenue because of price increases (£895m v £872m). I rather expect letter volumes to start going down much faster and so outweighing. the benefit in revenue from price hikes.

TMS - I think it is perhaps KPMG being uber sensitive in a takeover situation. However, it does smack of their internal risk processes catching up with something that may be “soft” in the accounts - if so, almost certainly the balance sheet. Impossible to understand why this problem has only been identified now.

It is indeed very odd. Auditors have started to get a bit tougher in the last few years and delayed clearing accounts. However, it has been in relation to very much smaller companies on, typically, AiM or those that have been highly acquisitive eg Sorell’s S4 where accounting disaster is usually not far behind.

IDS’s financials are not particularly complicated - pretty simple balance sheet which is key to auditing accounts. So it is difficult to know what KPMG is up to and why no notice. They must either be arguing with IDS over a particular issue or have been utterly incompetent.

I never expected the numbers to be the problem. I thought it was something around the messaging.

They have to get the consent of the Takeover Panel to extend the PUSU deadline. The Panel May agree relatively easily once if negotiations seem to be coming to a conclusion but it won’t allow continuous extensions of the deadline running into weeks.

It is very peculiar that the results have not been released. As others are saying you would normally expect 7.00am and if not that 8.00am. There are no particular rules requiring IDS to get the results out today other than once you know your results you are obliged to get them out a soon as possible. The more important issue is that they have raised an expectation in the market that they will release today (and have lined up analyst calls). It is not a good look for a FTSE 250 company even though IDS is a bit slow generally to release results and certainly takes a lot of time to get the full glossy annual report out. However, I expect the results to be out shortly. They should normally have submitted the RNS release for issue first thing today at close of business yesterday but perhaps they are revising wording due to the election announcement.

There is a column in The SundayTimes by Oliver Shah speculating on why Kretinsky is looking to buy IDS when, when interviewed last year, he said he had no intention to do so and said RM would be be better off being part of a public company.

A reason being given for the change of heart is the perceived need to move into out-of-home delivery, particularly lockers. Apparently Kretinsky has in mind 10,000 locker stations for RM and several times that across Europe for GLS. Total cost £600m, an investment which he thinks shareholders in a public company are too short term to tolerate. Probably correct, given everything else going on in RM which near term impacts results. It would almost certainly involve an equity fund raise and short term dilution.

10,000 locker stations could probably handle 80m parcels out of RM’s 1.5bn.

I doubt this is the only or even main reason but it is interesting that Kretinsky sees out-of-home as another main battlefield for RM.

There are two ways to effect a takeover:

Scheme of Arrangement (“Scheme”). This is the normal method nowadays. For that Kretinsky has to get 75% of the vote. Crucially, this is 75% of those who DO vote and not 75% of the total potential overall shareholder voters. Kretinsky cannot vote his shares. So a relatively small number of shareholders can block him. A Scheme has the advantage that, if approved, all shareholders are bound to the takeover and delisting and their shares are bought out.

Contractual Offer. The traditional route. K needs to get 50% plus one vote (of ALL the potential voting shareholders, not just of those who do vote). He can vote his shares. Less attractive as, on top, still needs a 75% vote to delist and also needs to get to at least 90% to compulsorily buy out recalcitrant shareholders (“squeeze out”).

Takeover structure yet to be determined but a lot of moving pieces and, given the maths, certain institutional shareholders, even those with not especially big shareholdings, need to be won around. The share price reflects these uncertainties.

It was paid on 26 April. You would have needed to be holding shares on 2 April to have got it.

The takeover proceeds have to be paid out no later than 14 days after the date the Scheme became effective (10th May). So no later than 24th May.

Merlwood/TMS

To be a bit clearer - as I was answering Merlwood’s post on how I see the situation not on the precise question Merlwood posed.

We are currently in possible offer territory; there is no actual offer. So if Kretinsky on 15 May (or before) says that he has no intention to actually bid for IDS then he cannot come back for six months. I think it will be either this situation or a much improved offer. Any offer, I think, will need to be recommended by the Board and supported by irrevocables (or intention to vote in favour of the takeover) by institutional investors with sufficient votes to give the revised offer a decent chance of going through. I cannot see him going hostile as IDS is such a political football and he will need all on side - Board, employees, unions, Ofcom, government etc.

Therefore, as set out above, I don’t see Kretinsky putting in an offer that gets rejected (which was Merlwood’s question). If he did then he cannot come back for 12 months. However, it is easy to be wrong on these things.

On TMS’s point as to whether another VESA vehicle can be used to circumvent any timing restrictions then I think the answer is no. The Takeover Panel rules also bite on any entities operating “in concert” with Kretinsky. The definition is broad and includes, inter alia, subsidiaries and entities where he holds more than 30%.

The rules are in 2.8 and 35.1 of the Takeover Code if anyone cares to grind through them. I should also add that you can go along to the Panel to get certain concessions. They are normally fairly pragmatic.

Merlwood - not before six months.

Yes, thank you. I was wondering that. Under the rules it is quite difficult to do share buy backs in a consistently rising market. At the moment it looks like the £2bn might last most (if not all) of the year (Buyback started after 35-40 trading days, 52 of buy back trading days and so say about 160 trading days left and we are not one third through the £2bn. Of course a lot depends on the share price and its direction).

Harrogate4

I think it is probably the other way around. There is a near certain uplift to 14.85p which will be paid by around the third or fourth week in May. So people are looking to take that gain which when annualised is quite attractive. I see Decagon and Samson have been buying post the final vote.

I cannot recall a court striking down a takeover Scheme so it should be a formality from now. The real uncertainty for the takeover is with the regulatory clearances which have been obtained.

It will be in Guernsey. See original,Scheme Document.