City Takeover Panel Probes UK ISP Daisy Group for Investor Collusion

Several investors behind the Lancashire-based Daisy Group, a telecoms and broadband supplier that’s thought to be worth around £400 million, are reportedly the subjects of a secret investigation by the City’s Takeover Panel for collusion over their combined 36% shareholding in the provider.

At present Invesco Perpetual has a shareholding of just over 22% in the ISP, while Oakley Capital has around 14%, although city rules prevent them from colluding. But if the City’s Takeover Panel finds that the two have been colluding then that could run into a conflict with the existing rules, which treats a 30% holding as the level at which effective control is obtained.

The investors, if found guilty of breaching the rules, could be forced to either make a cash offer to purchase the remaining shares or they might instead be asked to reduce their collective stakes below the 30% threshold. According to Sky News, the latter outcome is deemed more likely.

Takeover Panel – Rule

When a person or group acquires interests in shares carrying 30% or more of the voting rights of a company, they must make a cash offer to all other shareholders at the highest price paid in the 12 months before the offer was announced (30% of the voting rights of a company is treated by the Code as the level at which effective control is obtained).

It’s noted that Invesco and Oakley appear to have broader connections, with the former being a major shareholder in Oakley’s listed vehicle on the London Stock Exchange. In addition, Woodford Investment Management is also one of Daisy’s shareholders (4%), a new venture that was setup by UK fund manager Neil Woodford, whom incidentally left Invesco after initially helping to build their holding in Daisy. Woodford also helped Oakley to launch its new business.

Naturally all those involved claim that many of these things are in the past (no longer relevant) and Oakley is also understood to have said that they exert no management control over Daisy. Meanwhile, over the past few months, both Vodafone and Virgin Media’s parent (Liberty Global) are understood to have been sniffing around Daisy, but so far the initial talks do not appear to have grown into an offer.

A decision is expected soon.