A question about privitisation

[lala]

Sorry for a question that is going to sound really stupid but something I do not understand.

Royal Mai is 100% about to be split.

10% goes to us workers

38% staying with the government

that leaves 52%

loads of shares are going to be sold to lots of individuals/investment people/etc

surely no other company or person are going to buy more than 38% out of the 52% left are they? that would still make the government the larger (although not majority) stakeholder?

wouldn't it be hard for somebody to make too many changes to our t&c's etc unless they had a massive percentage of the business?

or have I totally missed the whole point of it all? - I really don't fully understand it

[TrueBlueTerrier]

wouldn't it be hard for somebody to make too many changes to our t&c's etc unless they had a massive percentage of the business?

No she is already in place - the difference after today is that instead of reporting to the Government who hopefully want us to provide a 1st class service, she will now report to the shareholders (such as the Singaporean and Kuwaiti governments) who will want a return on their investment, that is from profits and dividends. So the pressure for her to cut fixed overheads (us and our T&Cs) will increase.

[lala]

Thanks for the answer. I kept hearing things about companies like tnt taking over us so got a little confused. I was thinking we would end up being taken over!

[UnhappyGremlin]

Thanks for the answer. I kept hearing things about companies like tnt taking over us so got a little confused. I was thinking we would end up being taken over!

It's still a possibility in the longer term.

[lala]

Thanks for the answer. I kept hearing things about companies like tnt taking over us so got a little confused. I was thinking we would end up being taken over!

It's still a possibility in the longer term.

Would that be if a company bought up shares as people sold them and gradually built their amount? Also i guess there is the chance the government will sell off the rest of the company bit by bit when it wants more money?

[UnhappyGremlin]

Thanks for the answer. I kept hearing things about companies like tnt taking over us so got a little confused. I was thinking we would end up being taken over!

It's still a possibility in the longer term.

Would that be if a company bought up shares as people sold them and gradually built their amount? Also i guess there is the chance the government will sell off the rest of the company bit by bit when it wants more money?

Yes and yes.
It's a wait and see.
Nobody can give a definitive answer either way.

[wandle]

Would that be if a company bought up shares as people sold them and gradually built their amount? Also i guess there is the chance the government will sell off the rest of the company bit by bit when it wants more money?

Yes, any shareholder can build up a stake in the business, by acquiring more shares.

But the stock exchange is governed by rules which force investors to disclose when their shareholding has gone above certain levels. (I think the first milestone is when they own 5% of the total shares of the company, if I remember correctly). So if someone tries to mount a takeover bid, we would get early warning of the fact they are trying to build up a stake in the business. Also, if their shareholding reaches 30% or more, they are obliged - under Takeover Panel rules - to make a full offer to all shareholders (aka a Takeover Bid).

Sometimes, a company trying to build up a stake in their 'target' company will - once their shareholding has passed the 5% threshold - try to acquire large blocks of shares that other investors have already built up, so that they can get to the 30% level more rapidly. But, let's say (hypothetical example) TNT (or whoever) had to disclose that they had passed the 5% threshold, and asked XYZ Pension Fund to sell their 3.5% stake directly to TNT. If the market price of Royal Mail was, at that time 400p/share, XYZ Pension Fund may well ask TNT to pay a higher price, say 500p, in order to agree to sell their shares to them. (A bit like a lower league football team receiving transfer bids from several clubs, and then, when they realise it's Man City that's interested, suddenly the asking price goes up!) The wider stock market would soon learn of this 500p offer, and the share price of RM would rise sharply, as people started to anticipate a full Takeover Bid of at least 500p/share. But this then makes it harder for TNT to acquire further shares, because the cost of doing so rises in tandem with the higher share price.

Of course, a bidder could try to approach the government directly, and offer to acquire their 38% stake. But in so doing, whatever offer (say 550p/share) they made to the government, would also have to to be offered to every other shareholder...

[taxi4leighton]

well put wandle.and my fear is that within the next 2 years we will be taking over by a "hostile-bid".a company which will sell-off valuable estate,different functions like distribution,and let the letters just wither away

[nataddick]

Take a look at the article in today's Daily Mail

http://www.dailymail.co.uk/news/article ... 38-up.html" onclick="window.open(this.href);return false;

'Mystery surrounds the identity of City institutions who were allowed to buy shares.
Like private investors, many lost out, with 500 of the 800 who asked for shares being rejected.
Shareholders do not have to disclose their stakes unless they own 3 per cent or more of a publicly-listed business.
In a move which will help Royal Mail keep its investors under the radar, not a single institution went over this threshold.
Mr Cable said only ‘stable, long-term investors’ were offered shares, with names such as Fidelity, Standard Life, BlackRock and Threadneedle known to have been successful.'

[fishtank]

The government will not hold onto its stake for long.
The plan is to dispose of the whole thing,probably by next spring.

[dvbuk55]

The government will not hold onto its stake for long.
The plan is to dispose of the whole thing,probably by next spring.

Will almost certainly be before the next election, but I'm a bit bored now with shares and privatisation, what's done is done. I'm more interested in what's on the table for the forthcoming agreement and that's what we should be concentrating on, still very quiet though. We don't even know if they are talking and if there's any progress.

[clashcityrocker]

The government will not hold onto its stake for long.
The plan is to dispose of the whole thing,probably by next spring.

Will almost certainly be before the next election, but I'm a bit bored now with shares and privatisation, what's done is done. I'm more interested in what's on the table for the forthcoming agreement and that's what we should be concentrating on, still very quiet though. We don't even know if they are talking and if there's any progress.

My guess is the result of the ballot next week will liven the debate up.
Or maybe not.

[mickeymacca]

The government will not hold onto its stake for long.
The plan is to dispose of the whole thing,probably by next spring.

Will almost certainly be before the next election, but I'm a bit bored now with shares and privatisation, what's done is done. I'm more interested in what's on the table for the forthcoming agreement and that's what we should be concentrating on, still very quiet though. We don't even know if they are talking and if there's any progress.

My guess is the result of the ballot next week will liven the debate up.
Or maybe not.

Do you have an opinion of how the vote may turn out Clash?