Member Info for Hounddog10

Ironmc

There should be no problem that the certificates are in the name of Royal Mail. The change to IDS is simply a name change. Even Equiniti, just about, should be able to handle that. The timetable is almost certain to get pushed back and, if so, this should be known by Monday. Realistically nothing you do now will make a difference before that so probably best to wait. Overall the decision remains as to whether to sell at the current uplifted price) or hope that the deal goes through hopefully with an improved offer. There is no advantage in accepting early. This takeover will be decided by the institutions.

You get the higher amount (paragraph 4(a) of page 71 of the Offer Document).

If the offer lapses for any reason then shares are returned to those who have accepted (paragraph (l) top of page 76 of the Offer Document). So the (eventual) sale to DK is conditional on the offer going through but acceptees lose control of their shares in the meantime as they have gone into escrow. A good point. I should have been a bit clearer.

You have sold your shares to DK and they are now held in escrow for him. The next thing that happens is that he will pay over to you the 2p final dividend at end September. Then sometime in Q1 2025 assuming the deal goes forward on the current basis and is successful you will be paid 360p plus 8p special dividend. The monies go to your ISA.

Saitoman

It is a good question. The answer is at the bottom of page 30 of the Offer Document. IDS cannot be delisted any earlier than 20 business days after DK has got to 75% (Day 60) or the first date when compulsory notices under the Companies Act are issued to force out non-accepting shareholders (ie if/when he gets to 90%). In practice I think this means that IDS will remain listed (and so shares tradeable) for at least the period of the “extra” 14 days. However, this should be checked against announcements closer to the time of Day 60 (whenever that might be).

It is also worth noting that once DK gets to 75% the share price (assuming no revision to the offer) should go to 368p (but with a very slight discount) so anyone would be largely indifferent between selling and accepting the offer.

Redceo. Thanks. I hope at least some of the comments are helpful. It is quite complicated.

2/2

(3). To answer mike’s point as to whether DK can increase his offer after it has been rejected. No he can’t - and he cannot come back for 12 months with a new offer. However, he and his bankers will be constantly evaluating major institutional shareholder interest (and talking to them) PRIOR to the final acceptance deadline and will be ready to increase DK’s offer (to however much extra he is willing to pay - if indeed anything extra) to try and get them over the line. However, he has only until “Day 46” to do that (but that may be quite some time in the future).

(4). To answer saitoman’s point the extra 14 days is available to all (it is set out at clause (q) at the top of page 68). It is rather tucked away in the Offer Document. It is a mechanism such that if DK gets to 75% or above he can then try to get to 90% to get to compulsorily “squeeze out’ (buy) all remaining non-accepting shareholders. Even if you are vehemently against the takeover it is probably best at this stage to accept defeat and accept because if DK doesn’t get to 90% you might be stuck with unlisted shares.

I have seen the extra 14 days offered twice in the past but don’t count on that.

*. Please be aware that nearly all these comments are only relevant to a takeover done by contractual offer. This is the traditional way of doing a takeover but is relatively rare nowadays and most takeovers are done by a Scheme of Arrangement where different considerations and procedures apply.

1/2

A few points.

(1). There are three important days on the standard timeline for a takeover being done by contractual offer *. “Day 39”, “Day 46” and “Day 60”. If anyone cares to grind through the Offer Document they are mentioned in a number of places and are in the definitions (pages 128 - 129). The day count is on a calendar basis (not business day) and is from the issue of the Offer Document (26 June). Implications:

(a). Day 39 (4 August). From this day the target (IDS) cannot issue any more material financial or operational information - quarterly updates, interims, annual reports etc.

(b). Day 46 (11 August). The offeror (DK) cannot revise his offer.

(c). Day 60 (25 August). The offer must be unconditional as to being accepted (75%) (however, see (4) below) and have all preconditions met (essentially regulatory and anti trust clearances)

(2). As said before there is no hope of the regulatory and anti trust clearances being received by 25 August so within the timetable (which is following a standard one required by the Takeover Panel) a mechanism has been put in place (footnote 3 of page 13) to review and then suspend the timetable by 5pm on 2 August. The reason this date has been chosen is that it is the first of the critical dates in the standard takeover timetable. In an earlier post I alluded to it being Day 46. That was incorrect. It is effectively Day 39 - Day 39 falls on 4 August which is a Sunday and 2 August is the earliest business day. So there should be an announcement on timetable on COB 2 August or start of business on Monday 5 August (again I was incorrect before on this in saying that there could be an announcement on 3 August as I had not realised it was a Saturday). I cannot imagine anything other that the timetable will get suspended and it will remain suspended until all anti trust and regulatory clearances are received. At this point new dates for Day 39, Day 46 and Day 60 will be set. This is the reason the Offer Document anticipates completion of the takeover (if it is successful) in Q1 2025.

They are 112 trading days left in this year (per hardup’s post £1bn used for 104 trading days). So the remaining £1bn could last more or less to the end of the year. Of course a lot of factors impact.

PP. if DK doesn’t get all he needs then his offer falls away and so does your acceptance. You will be left with your shares as you were before. It is likely that the share price will then fall as there is currently a “bid premium” in the share price. However, that is not certain. For example, if the USO got reformed that will likely boost the share price. The new government’s consideration of the NSI for the bid may also be a trigger to think carefully about the USO. The two issues are interlinked.

If you accept DK’s offer you get what he finally offers (fourth paragraph).

There is no particular merit in accepting the offer early. The clue is that the institutions have not. They are waiting. However, you will ultimately need to make a decision. For this type of takeover offer (contractual offer) you will not necessarily be compulsorily bought out if you do not accept the offer and DK gets to his desired 75% (it is different if the takeover was being done by a Scheme of Arrangement where the majority vote binds all shareholders if they like it or not). You will, potentially, be left with shares that have value but you will have no means to sell.

You are almost certain to be bought out if DK gets to 90% (a high hurdle) and can then use Companies Act provisions to forcibly buy you out. It is at his discretion but he will almost certainly do it. It is highly likely that he (if he gets to 75%) will have a further go to buy out recalcitrant shareholders even if under 90%. However, do not count on it.

The decision now for shareholders is whether to take the current uplift and sell or hope that the DK offer goes through or gets increased or that there is a higher counteroffer (unlikely but technically possible). However, you will only get paid out in Q1 2025 and you may think there are better places for your money.

If DK increases his offer shareholders that have already accepted get the better price.

Watch out for an announcement end 2 August or beginning 3 August as to whether the timetable gets pushed back. If it does not then bear in mind the 25 August deadline, but that brokers etc will require more advance notice (usually a few days) for admin reasons to process any acceptance of the offer you may want to make.

Simx

Yes, “Day 60” will almost certainly be pushed back to Q1 2025. It is the critical date when everything is agreed. The takeover cash (including 8p special dividend) is paid 14 days after that. And yes, there is certainly a possibility that with improved results DK may be pushed higher. However, a lot could happen in the next few months both positive and adverse.

Results were surprisingly good. £250m extra revenue in one quarter, most of it in RM. Much more limited drop in letter volume (4%) and parcel volume up 11%. However, letter revenue will have got a boost from the election. Profit forecast (adjusted operating profit before VR costs) for current financial year reaffirmed.

Only retail investors who are not particularly conversant with the timeline will have accepted by now. The institutions will be sitting on their hands. The next major date on the scheduled takeover timeline is 2 August. 2 August is “Day 46” (46 days after issuance of the Offer Document) of a standard takeover timeline. At this point it is assessed whether “Day 60” can be met. By Day 60 the takeover offer must be declared unconditional as to sufficient acceptances and all preconditions (regulatory/antitrust) have been received. There is no hope of the latter because, at the least, clearance on the UK’s National Security and Investment Act will not happen (and there are other country and EU clearances needed).

At this point the current timeline (where Day 60 is currently 25 August) will almost certainly be suspended and timings pushed back until clearances are obtained (if indeed they are). Once clearances have been dealt with there will be a revised final date for acceptances. Whatever happens there will be 14 days notice of the final date for acceptances.

DK wants 75% acceptances to not only take control but to be able to delist the company and that is how his offer is structured. He could take it down to 50% (with the consent of the Panel) but that is unattractive as he only gets control and cannot take IDS private.

The carrying value of these pref shares that are being redeemed is £12m. Negligible.

Sorry. That was probably myself that gave that date. In fact the deadline is 8.00am on the Business Day following 17 July. I did not read the Offer Document carefully enough (it is on page 68) in posting a long post. So it should be out first thing tomorrow by RNS.

You will only be paid out in Q1 2025.

Sid786

If you don’t vote:

Overall acceptances less than 75%: you shareholding in a listed IDS remains

75-90% acceptances: you will hold shares in an unlisted IDS

90% acceptances: DK will forcibly buy out your shares. He doesn’t have to but he, with near certainty, will

Simx

You raise some good questions.

If a shareholder accepts the DK offer then if shares are held in certificated form they have to be surrendered along with returning the acceptance form (page 32 of the Offer Document). So at that point you are locked out from selling because you don’t have the share certificates.

If the shares are held in electronic form in CREST then on acceptance they are moved into an escrow account and you cannot trade (page 34).

Acceptance can be reversed prior to the final acceptance date (procedures set out on pages 69 - 71). This involves getting the share certificates back or moving shares out of escrow. I should imagine there would be a fair amount of admin charge to do so. I have never done it myself.

The reality is that I think nearly everyone waits to towards the end of the acceptance period to come to a decision and so in practice they have the potential to sell up until that point. Notification of the level of acceptances start from 17 July and are weekly thereafter (and there may be additional notifications in certain circumstances) - so that will give an indication of where things are going.

The 75% acceptances needed is based on the total number of shares that can be put forward for acceptance (ie total shares in existence). DK can put his shares forward for acceptance (bottom of page 29).

If a shareholder ends up not being bought out and becomes a shareholder in Bidco then, as it is not a listed company, the protections and the disclosures required by the Listing Rules fall away but the protections for minority shareholders in the Companies Act remain. So a minority shareholder cannot be arbitrarily disadvantaged to favour the majority shareholder. So, for example, if a dividend is payable on the ordinary shares it has to go to all shareholders.

The problem a minority shareholder has is that DK has considerable freedom to do what he wants eg he might not declare a dividend at all for several years so as to invest in the business.

However, the overriding difficulty is that a shareholder in a private company cannot trade the shares. It is difficult to see any upside in ending up in that position.

I agree the unions seem to be being relatively pragmatic at the moment but the problem always comes down to when action needs to be taken and it is then they dig their heels in. As you say, I think Labour wants to keep the whole thing at arm’s length. They don’t want to fund RM losses and are happy for the private sector to take the flak for restructuring RM.