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Royal Mail share price little changed despite Labour nationalisation plans

11 May 2017, 13:53

http://invezz.com/news/equities/26059-R ... ion-plans-

Shares in Royal Mail Group (LON:RMG) have been little changed in London this morning, despite reports that Labour is set to pledge to re-nationalise the postal operator along with energy companies and railways. The news comes ahead of the UK general election next month.

As of 09:35 BST, Royal Mail’s share price had lost 0.33 percent to 419.00p, slightly underperforming the broader London market, with the benchmark FTSE 100 index currently standing at 7,385.38 points, flat in percentage terms. The group’s shares have lost more than 15 percent of their value over the past year, and are down by some nine percent in the year-to-date.

The Times reported this morning that leaked drafts of the Labour Party’s manifesto showed that the 43-page document contained a pledge to nationalise Royal Mail, along with energy firms, railways, and bus firms. According to the manifesto, the postal operator would be returned to public ownership after the coalition government’s ‘historic mistake’ to sell it off.

The FTSE 100 group’s privatisation started in 2013 with a stock market float which raised £2 billion at a price of 330p a share. The move, however, was widely criticised as Royal Mail’s share price jumped by more than a third on its first day of trading, fuelling concerns that the company had been sold off too cheaply. The privatisation process concluded about two years later, ending nearly 500 years of public ownership of the postal operator.

In analyst news, Liberum Capital reiterated its ‘sell’ rating on Royal Mail today, valuing the shares at 400p. According to MarketBeat, the postal operator currently has a consensus ‘hold’ rating and an average price target of 463.82p. Royal Mail is scheduled to update investors on its full-year performance on May 18.

As of 10:09 BST, Thursday, 11 May, Royal Mail share price is 417.90 p.

Royal Mail share price little changed despite Labour nationalisation plans

11 May 2017, 15:52

Jeremy lead us out of this sweatshop ,,plssssss

Royal Mail share price little changed despite Labour nationalisation plans

11 May 2017, 16:20

It's a non story. Labour are an 'also ran' in this election, unfortunately.

Royal Mail share price little changed despite Labour nationalisation plans

11 May 2017, 16:29

It wont work, for a start he'll have to pay back share holders, and we all know that those morons can't add up if their lives depended on it, but not only RM, they want the power companies and rail network nationalised again ?, we all know that means sh it for us all.

Royal Mail share price little changed despite Labour nationalisation plans

11 May 2017, 17:11

borgpicard wrote:It wont work, for a start he'll have to pay back share holders, and we all know that those morons can't add up if their lives depended on it, but not only RM, they want the power companies and rail network nationalised again ?, we all know that means sh it for us all.


Well the railway companies they can (mostly) nationalise at zero cost by merely waiting for the franchises to end and then not re-letting them. However whilst this idea might seem sensible it does have a few flaws!

1. Not all the franchises are up for renewal within the period of the next Parliament, or even within the period of the Parliament after the next one!
2. What about the open-access operators and the freight operators who don't have franchises to expire.
3. What about the rolling stock companies (ROSCOs) who own almost all the passenger stock and who also don't have franchises!
4. Transport is a devolved matter, so will they be renationalising things as English Railways, Scottish Railways and Welsh Railways, or just re-centralising power in Whitehall? (Should go down a treat in Cardiff and Holyrood, especially if NI Railways remains the responsibility of Stormont!)

However if they want to nationalise the Royal Mail then (at today's prices) that's about £4.25Bn, National Grid is noticeably larger at about £38.75Bn, Centrica is another £10.5Bn, SSE is about £14.63Bn, United Utilities is about £7Bn and Severn Trent is another £5Bn (I got bored looking up market capitalisations at this point!) so it's going to get really expensive really quickly!

Royal Mail share price little changed despite Labour nationalisation plans

13 May 2017, 12:07

toomuchcoke wrote:
However if they want to nationalise the Royal Mail then (at today's prices) that's about £4.25Bn.... so it's going to get really expensive really quickly!


IF Corbyn should win (unlikely), how on earth is he going to justify spending £2.15bn gaining a controlling 51% stake in Royal Mail (at yesterday's closing prices) when the NHS is crying out for funds? Voters just won't give him that chance.

it also begs the following questions:

what price would the government offer exisiting shareholders, to part with their shares? The original floatation price of 330p/share? No-one would accept the offer, when the price stands at 430p! And surely, if someone commits to buying-out existing shareholders, with no declared limit on how much they're prepared to pay, wouldn't the market price rise and rise ?

The government can't 'compulsory purchase' listed shares, can they? Even if they could, it would permanently damage investor confidence in shares listed on the London Stock Exchange, and FTSE-100 companies would move their listing to Frankfurt, Paris, or New York, surely ???

Royal Mail share price little changed despite Labour nationalisation plans

13 May 2017, 15:04

wandle wrote:IF Corbyn should win (unlikely), how on earth is he going to justify spending £2.15bn gaining a controlling 51% stake in Royal Mail (at yesterday's closing prices) when the NHS is crying out for funds? Voters just won't give him that chance.


If someone (including the government) acquires more than 30% of the shares in a company, then they are legally obliged to make an offer to buy out the rest of the shareholders. If they get as far as owning >75% of the shares then they can delist the company from stock market, and if they get as far as owning >90% then they can compulsorily purchase the remaining shareholders. (It used to be possible for the company to decide to perform a share merger where they'd replace every 10,000 existing shares with 1 new share worth 10,000x as much as the old shares and incidentally wiping out the small shareholders. However I'm not sure if that's still legal? Can't exactly be described as 'moral' either!)

One of the senior Labour people seemed to be claiming that they could do the nationalising because the companies in question pay higher dividends than the cost of the government borrowing to make the purchases. However IMHO that ignores two rather large issues - 1. income & costs at the companies in question would have to stay largely the same, so I don't think it would (e.g.) result in cheaper postage and pay-rises all round! 2. Unless the government made a special effort to ensure otherwise, the dividends in excess of the interest wouldn't be used to buy up and retire the debt issued to buy the companies, so the UK's national debt would increase permanently as a result of this.

wandle wrote:what price would the government offer exisiting shareholders, to part with their shares? The original floatation price of 330p/share? No-one would accept the offer, when the price stands at 430p! And surely, if someone commits to buying-out existing shareholders, with no declared limit on how much they're prepared to pay, wouldn't the market price rise and rise ?


Given a current price of 430p, they'd probably have to offer about 440-450p to get serious levels of interest. Though obviously the share price would then tend to move towards the offer price.

wandle wrote:The government can't 'compulsory purchase' listed shares, can they? Even if they could, it would permanently damage investor confidence in shares listed on the London Stock Exchange, and FTSE-100 companies would move their listing to Frankfurt, Paris, or New York, surely ???


Well they could do a compulsory purchase (even do a "compulsory purchase without compensation") if they wanted to. The Transport Act 1947 which nationalised the GWR, LMS, LNER and SR into British Railways (as it was then known) did so compulsorily with the shareholders being compensated with (according to Wikipedia) gilts paying 3% that would be redeemed after 40 years. So they could do it, though depending upon how they went about things it could have as you say repercussions wrt the confidence of foreign investors. If the UK was still within the European Convention on Human Rights at the time then I could definitely see a lawsuit being generated if they attempted the "without compensation" route.

Royal Mail share price little changed despite Labour nationalisation plans

19 May 2017, 00:14

You make some interesting points, toomuchcoke.

Normally, if someone tries to build up a stake of 30%, and thus reach the point where they can make an 'offer to other shareholders', they would either have to buy in relatively small chunks over a long period of time, or wade into the market and buy quickly, to avoid the price moving against them, i.e upwards, thus increasing the amount they need to spend to gain control.

So, even if the government reached the 'tipping point' of 30% of the shares being under their control, I believe they are obliged to offer at least the average price that they paid, for their 30% stake, to all other shareholders. In essence, the government would be acting almost the same as a hostile bidder in a contested takeover bid.

If, as you suggest, the goverment offered the remaining 70% of shareholders only 10-20p more than the current share price to part with their shares, who in their right mind would accept such an offer? Shareholders are likely to receive at least 23p/annum in dividends if Royal Mail plc remains a listed company, so they'd need to offer a bigger premium than that to win enough shareholders over! Also, what about the free shares which Equinity are still holding in trust, whose ownership does not pass to employees until the shares reach their 5-year anniversary from date of issue? How would they gain control of those? Can they even do so, legally-speaking?

Royal Mail share price little changed despite Labour nationalisation plans

19 May 2017, 10:07

It's all totally academic anyway, as Corbyn has promised so much (rightly) for social care and the NHS that there'll be nothing left over to renationalise anything important, let alone RM.

A future possible government-owned mail delivery service probably doesn't keep too many people awake at night in excitement, so well done Jezza and the boys for acting on dogma alone and picking something so meaningless to focus on.

Royal Mail share price little changed despite Labour nationalisation plans

19 May 2017, 17:45

wandle wrote: Can they even do so, legally-speaking?


The government make the law. And they (BofE) print the money. And they set the price of that money.
It wouldn't be so hard as all that to re-nationalise - about as hard, technically, as it was to privatise IMHO.

Royal Mail share price little changed despite Labour nationalisation plans

19 May 2017, 18:23

With the goal of definitively liquidating the economic power of the privileged few who were conspiring against the people, in a session which began on the evening of October 13, 1960, the Council of Ministers approved Law 890 on corporations, and Law 891 regarding banking.

Law 890 stipulated the nationalization via expropriation of all industrial and commercial companies, including all associated factories, warehouses, depots, other property and rights. Among the 382 companies nationalized were 105 sugar mills; 18 distilleries; six alcoholic beverage companies; seven food processors; two oil and fats companies; three soap and perfume factories; five dairies; two chocolate factories; nine packaging manufacturers; 60 textile and clothing companies; three paint producers; three chemical companies; seven paper mills; six basic metallurgical companies; one flour mill; 16 rice processors; 47 household goods warehouses; ten coffee roasters; three drug companies; 13 departments stores; eight railroad companies; one printer; 11 movie theater chains; 19 construction companies, one electrical company; and 13 maritime shippers.

He will surely follow the Cuban model:
Nationalization via expropriation.

Royal Mail share price little changed despite Labour nationalisation plans

19 May 2017, 18:54

That it would cost £5 billion to re-nationalise is not really the issue - the issue is that it was sold off for £3 billion in the first place.

A pretty clear cut couple of billion pounds giveaway to the City and Wall Street by the Conservatives - but that, fellow posties, is not an issue apparently. We are obviously a wealthy enough peoples to be having these handouts to the corporate elite.
Why isn't it an issue ? Cos Corbyn's a commie, thats why.
Cos the narrative is being decided and demarcated by those that received the £2 billion free state handout in the first place, thats why.

If the Govt. had sold it at the real market price - and then decided to buy it back at market price, no-ones any the worse off for it are they ?

Royal Mail share price little changed despite Labour nationalisation plans

19 May 2017, 19:23

Apart from people who made an entirely legitimate purchase of shares and now find that although the government has agreed to recompense them for their loss of shares, they've still had their shares forcibly appropriated, no, none at all. :crazy:

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