take over

[taxi4leighton]

what will happen if we get privatised,and a few years after we are taken over by abigger company.will they have to comply with USO and the agreements we have

[UnhappyGremlin]

They would have to comply with whatever the business has in place/is required to do under Ofcom regulation. They would have to comply with the USO.

How long it would take them to try and get this state of affairs changed is another matter.
I'd go for not long.
It would damage their profit making opportunities.

[wandle]

Well, if it goes ahead, the government is intending to retain a majority shareholding, reported to be 51% (final details will be in the prospectus).
We, the employees, will own 10% of the shares, held in trust for 3 years from the date of the flotation.
So even after the shares are floated, even if a potential rival attempted to buy up all the shares available on the market (which would drive the share price up, and prove very costly), the maximum percentage of the company's shares they could acquire, would be 39%. So they would not be able to get a controlling interest in the company.

Further down the road, if the government decides to offload a further chunk of shares during the period of whatever agreement the CWU/RM sign up to, again, no potential takeover bidder could gain complete control of the company whilst 10% of the shares remain in the employee's hands, via the trust arrangement.

Perhaps, if we cannot stop privatisation, the CWU should use that 3-year period where we are barred from selling our shares, to educate members as to the wisdom of hanging onto the shares. Persuade people not to sell their shares, even after the 5-year period is fininshed (when no tax or NI would be payable). Because whilst the employees control 10% of the shares, no bidder could completely own the company...

[UnhappyGremlin]

As far as I'm aware, the Government intends to retain a minority holding, meaning they will offload a minimum 41%.
I believe they have also already said there will be a further issue in the following 12 to 18 months, if the IPO goes as planned (they believe it will be a huge success).

The 10% in employees hands would be irrelevant. If, after another sale in the future, any single company or group gets hold of 51%, they control it, and can do as they wish.
If it comes down to a vote, the majority shareholder would always win.
It wouldn't matter if the Government kept 39%, they may try and influence any majority shareholder, but it would ultimately be whoever has the controlling interest, that would and could make any choice they see fit.
The only issue would be that, if they tried to get rid of the USO, the Government could threaten them with re-nationalisation to prevent this, but then, the Government could do this anyway. Question is, would they?
I think not.

If any one group or person gets to a particular level of shareholding, I believe 90%, then they are required (by law?) to make an offer to buy up the remainder of the shares, and can de-list from the FTSE.

[Brain Fury]

As far as I'm aware, the Government intends to retain a minority holding, meaning they will offload a minimum 41%.
I believe they have also already said there will be a further issue in the following 12 to 18 months, if the IPO goes as planned (they believe it will be a huge success).

The 10% in employees hands would be irrelevant. If, after another sale in the future, any single company or group gets hold of 51%, they control it, and can do as they wish.
If it comes down to a vote, the majority shareholder would always win.
It wouldn't matter if the Government kept 39%, they may try and influence any majority shareholder, but it would ultimately be whoever has the controlling interest, that would and could make any choice they see fit.
The only issue would be that, if they tried to get rid of the USO, the Government could threaten them with re-nationalisation to prevent this, but then, the Government could do this anyway. Question is, would they?
I think not.

If any one group or person gets to a particular level of shareholding, I believe 90%, then they are required (by law?) to make an offer to buy up the remainder of the shares, and can de-list from the FTSE.

As you know, no owner of RM can unilaterally "get rid of the USO". The USO is enshrined in law and can only be changed by primary legislation. The Government doesn't need to retain any share of RM to influence the owner because it has a regulator to do this. Any refusal by a privatised RM to meet the obligations of the USO would be met by action by the regulator - probably fines which would hit shareholders in the pocket. Re-nationalisation wouldn't come into it.

[UnhappyGremlin]

As far as I'm aware, the Government intends to retain a minority holding, meaning they will offload a minimum 41%.
I believe they have also already said there will be a further issue in the following 12 to 18 months, if the IPO goes as planned (they believe it will be a huge success).

The 10% in employees hands would be irrelevant. If, after another sale in the future, any single company or group gets hold of 51%, they control it, and can do as they wish.
If it comes down to a vote, the majority shareholder would always win.
It wouldn't matter if the Government kept 39%, they may try and influence any majority shareholder, but it would ultimately be whoever has the controlling interest, that would and could make any choice they see fit.
The only issue would be that, if they tried to get rid of the USO, the Government could threaten them with re-nationalisation to prevent this, but then, the Government could do this anyway. Question is, would they?
I think not.

If any one group or person gets to a particular level of shareholding, I believe 90%, then they are required (by law?) to make an offer to buy up the remainder of the shares, and can de-list from the FTSE.

As you know, no owner of RM can unilaterally "get rid of the USO". The USO is enshrined in law and can only be changed by primary legislation. The Government doesn't need to retain any share of RM to influence the owner because it has a regulator to do this. Any refusal by a privatised RM to meet the obligations of the USO would be met by action by the regulator - probably fines which would hit shareholders in the pocket. Re-nationalisation wouldn't come into it.

Talking crap again.
Reading between the lines again. Adding 2 and 2 and coming up with 5.

Laws can be changed. I never, at any point, mentioned any kind of unilateral action, by any company or owner.
Never said the Government NEEDED to retain a share to influence the company. It is YOUR OPINION that re-nationalisation wouldn't come into it. I used it as an example of how the Government COULD force any new owner to comply with the USO.

The USO will go in my opinion. At some point, if privatised, the board or any new owner/majority shareholder would, over a period of time, put pressure on the regulator and try and gain Government influence should they retain a stake long term, to reduce the USO terms to a more favourable stance, and remove it totally in time. It may be a long process, but it will happen. It is one the areas where cuts can be made for profits to be increased.

The USO is up for renewal in 2021. The new board will use that fact nearer the time (if have not tried long before then) to get concessions. Who else could take on the USO licence? No one.
They will get the terms reduced, and I think removed totally in time.
They'll claim unsustainability, costing too much, unfair on them when these rules aren't put on other carriers.
Even if terms remain the same, they'll ask for subsidies. Which I also believe is inevitable in time.

Remember, Royal Mail ownership was 'enshrined in law', until a couple of years ago, it would have been impossible to contemplate selling it. Now it isn't. And it also isn't JUST a Government decision to sell it. There are many outside influences at work here, and I don't just mean the EU. There are big businesses and wealthy people pushing for this, all mates with people in Government.

[fishtank]

As you know, no owner of RM can unilaterally "get rid of the USO". The USO is enshrined in law and can only be changed by primary legislation. The Government doesn't need to retain any share of RM to influence the owner because it has a regulator to do this. Any refusal by a privatised RM to meet the obligations of the USO would be met by action by the regulator - probably fines which would hit shareholders in the pocket. Re-nationalisation wouldn't come into it.

Ofcom's role is to protect the overall sustainability of the USO,not it's component parts.
If ensuring that we continue to have a USO means a reduction in service in order to make it financially viable then that is what they will recommend to the Secretary of State.
What will government then do...

1.Force Royal Mail to deliver at a loss and risk Royal Mail walking away from the USO entirely?
2.Directly subsidise the USO?
3.Agree to a reduction in the USO?

Only one solution is likely isn't it?

[Brain Fury]

As far as I'm aware, the Government intends to retain a minority holding, meaning they will offload a minimum 41%.
I believe they have also already said there will be a further issue in the following 12 to 18 months, if the IPO goes as planned (they believe it will be a huge success).

The 10% in employees hands would be irrelevant. If, after another sale in the future, any single company or group gets hold of 51%, they control it, and can do as they wish.
If it comes down to a vote, the majority shareholder would always win.
It wouldn't matter if the Government kept 39%, they may try and influence any majority shareholder, but it would ultimately be whoever has the controlling interest, that would and could make any choice they see fit.
The only issue would be that, if they tried to get rid of the USO, the Government could threaten them with re-nationalisation to prevent this, but then, the Government could do this anyway. Question is, would they?
I think not.

If any one group or person gets to a particular level of shareholding, I believe 90%, then they are required (by law?) to make an offer to buy up the remainder of the shares, and can de-list from the FTSE.

As you know, no owner of RM can unilaterally "get rid of the USO". The USO is enshrined in law and can only be changed by primary legislation. The Government doesn't need to retain any share of RM to influence the owner because it has a regulator to do this. Any refusal by a privatised RM to meet the obligations of the USO would be met by action by the regulator - probably fines which would hit shareholders in the pocket. Re-nationalisation wouldn't come into it.

Talking crap again.
Reading between the lines again. Adding 2 and 2 and coming up with 5.

Laws can be changed. I never, at any point, mentioned any kind of unilateral action, by any company or owner.
Never said the Government NEEDED to retain a share to influence the company. It is YOUR OPINION that re-nationalisation wouldn't come into it. I used it as an example of how the Government COULD force any new owner to comply with the USO.

The USO will go in my opinion. At some point, if privatised, the board or any new owner/majority shareholder would, over a period of time, put pressure on the regulator and try and gain Government influence should they retain a stake long term, to reduce the USO terms to a more favourable stance, and remove it totally in time. It may be a long process, but it will happen. It is one the areas where cuts can be made for profits to be increased.

The USO is up for renewal in 2021. The new board will use that fact nearer the time (if have not tried long before then) to get concessions. Who else could take on the USO licence? No one.
They will get the terms reduced, and I think removed totally in time.
They'll claim unsustainability, costing too much, unfair on them when these rules aren't put on other carriers.
Even if terms remain the same, they'll ask for subsidies. Which I also believe is inevitable in time.

Remember, Royal Mail ownership was 'enshrined in law', until a couple of years ago, it would have been impossible to contemplate selling it. Now it isn't. And it also isn't JUST a Government decision to sell it. There are many outside influences at work here, and I don't just mean the EU. There are big businesses and wealthy people pushing for this, all mates with people in Government.

Well you say ...

" ... any single company or group gets hold of 51%, they control it, and can do as they wish. If it comes down to a vote, the majority shareholder would always win.
It wouldn't matter if the Government kept 39%, they may try and influence any majority shareholder, but it would ultimately be whoever has the controlling interest, that would and could make any choice they see fit. The only issue would be that, if they tried to get rid of the USO, the Government could threaten them with re-nationalisation to prevent this, but then, the Government could do this anyway. Question is, would they? I think not."

Perhaps you are just "accidentally" conflating the issue of control of RM as a company with the ability to change the USO but they are your words saying that a majority RM shareholder "can do as they wish" and the Government could threaten re-nationalisation (although you think they wouldn't) if RM "tried to get rid of the USO". So what happens then? Does the USO change or stay the same simply because RM wants it to and the Government won't renationalise? Neither RM wishes or the Government's attitude to re-nationalisation will cause the USO to change.

If the Government wants the USO to stay the same then it stays the same. It doesn't need to "threaten" RM with anything because it's the law. RM can "claim" anything it likes but the USO will only change if parliament (not the Government) agrees by passing primary legislation. Given the number of MPs that are supposed to oppose privatisation I am surprised that you believe that such legislation would definitely be passed. I am sure you also know that the review of the USO in 2021 is a review of whether RM remains the designated provider of the service not what the USO itself is.

I realise that your gloomy predictions for the USO etc are only opinions of what will happen. Of course these suit your wider anti-privatisation stance because they play to the legitimate concerns of people who might be affected by a change in the USO. I don't know what will happen to the USO or when and neither does anybody else. What I do know are the facts about what needs to happen for the USO to be changed and that it is in the control of the UK Parliament and nobody else.

[Brain Fury]

As you know, no owner of RM can unilaterally "get rid of the USO". The USO is enshrined in law and can only be changed by primary legislation. The Government doesn't need to retain any share of RM to influence the owner because it has a regulator to do this. Any refusal by a privatised RM to meet the obligations of the USO would be met by action by the regulator - probably fines which would hit shareholders in the pocket. Re-nationalisation wouldn't come into it.

Ofcom's role is to protect the overall sustainability of the USO,not it's component parts.
If ensuring that we continue to have a USO means a reduction in service in order to make it financially viable then that is what they will recommend to the Secretary of State.
What will government then do...

1.Force Royal Mail to deliver at a loss and risk Royal Mail walking away from the USO entirely?
2.Directly subsidise the USO?
3.Agree to a reduction in the USO?

Only one solution is likely isn't it?

4) Continue the policy of allowing pricing to ensure that the USO makes a reasonable commercial rate of return

Yes, only one solution likely

[clashcityrocker]

Only 40% of what we currently deliver is protected by the USO apparently.

[fishtank]

4) Continue the policy of allowing pricing to ensure that the USO makes a reasonable commercial rate of return

Yes, only one solution likely

The USO does not make a reasonable commercial rate of return across the board.
Urban areas subsidise rural areas.
Do you think that's a viable long term business model in the private sector especially with the likes of TNT reducing revenue in the profitable areas?

If pricing is to save the USO it will have to be some kind of Geographical pricing structure like zonal or FOB.
Being priced out of a service because you happen to live in a rural area amounts to much the same as having the service withdrawn.

[taxi4leighton]

if future owners were to challange the fairness of USO in the european courts?.i feel they would have very strong case,as it puts them in a disadvantaged position compared with our competetitors.USO must cost RM billions each year

[fishtank]

What I do know are the facts about what needs to happen for the USO to be changed and that it is in the control of the UK Parliament and nobody else.

Ofcom already has the legal tools to reduce the USO without recourse to parliament.

In section 31 of the Postal Services Act 2011 it states...

(1)At least one delivery of letters every Monday to Saturday—

(1)(a)to the home or premises of every individual or other person in the United Kingdom, or
(b)to such identifiable points for the delivery of postal packets as OFCOM may approve.

And in section 33 it states...

(2)The requirements in section 31 in respect of the delivery or collection of letters or other postal packets (requirements 1 and 2)—

(b)do not need to be met in such geographical conditions or other circumstances as OFCOM consider to be exceptional.

Would that be in the spirit it was originally intended?
Probably not but in a purely legal sense it's a huge gaping get out clause.

[dvbuk55]

Whatever the pros and cons are it is without a doubt that the USO will NOT be the primary concern of the new owners after year 1, where the dividend is guaranteed, when subsequent years will depend on profitability. I would, if I was considering investing, be a little bit concerned about the ceiling price of the letters rate unless costs can be curtailed somewhere else within the organisation - as the price increases it opens the door wider to competition in the letters market, reducing demand and therefore the workforce.

I believe TNT are at the moment going through a High Court motion of contesting RMs lack of VAT on Packets and Parcels whilst for the moment not including letters, apparently due to RM having to maintain the USO - but if that went then the magnanimity of TNTs lawyers might well be withdrawn and letters may be subject to VAT.

Personally I think the one price goes anywhere is totally antiquated in this day and age when there are so many external issues involved. Instead of PIP we should have gone for a zonal by weight/size pricing structure it would certainly have been more understandable than PIP.

[Brain Fury]

So a privatised Royal Mail could not or would not deliver a USO service in the UK and not only would Offcom and the Government facilitate this but so would the EC while still requiring a USO to be provided in every other member state? As far as I can tell the USO in many of these countries is provided by one or more privately owned companies as part of a long term business model. How is it possible that they can do it but RM couldn't?