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Royal Mail PLC on Thursday said it has been notified by the UK government that it thinks Vesa Equity Investment SARL may be planning to increase its stake in the postal company to more than 25%, and therefore it is reviewing the situation.
Secretary of State for Business, Energy & Industrial Strategy Kwasi Kwarteng told Royal Mail that he ‘reasonably suspects that arrangements are in progress or contemplation which, if carried into effect, will result in VESA increasing its shareholding in Royal Mail from 25% or less to more than 25%’.
Such a step would trigger an event under the National Security & Investment Act 2021. Kwarteng is therefore exercising his call-in power under section 1 of the NSI Act to investigate the increase in the Luxembourg company's stake.
The act was introduced in January and it allows UK government ministers to more closely scrutinise approaches by overseas interests. It also means the UK government will be able to impose certain conditions on a takeover or block it.
Royal Mail, a former state-owned company, is politically sensitive, as it is a huge employer in the UK and its responsible for its universal postal service.
Visa's most recent notification to Royal Mail, in July, indicated that it held just over 22% of the total voting rights in the company at that time, up from 21% previously.
Vesa has steadily increased its stake in Royal Mail since taking a 3.1% holding back in March 2020.
Since September of last year, Vesa has steadily increased its stake in one percent increments - to 17% from 16% in September, then to 18% and again to 19% in October. In January, the stake was raised to 20%, then to 21% in April.
‘Royal Mail will fully cooperate with this review and a further announcement will be made as and when appropriate,’ the company said.
Shares in Royal Mail were up 2.6% to 268.00 pence each in London on Thursday.
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