Winners (and losers) of the £3.6bn Royal Mail takeover, as investors prepare to give their seal of approval to the deal

The proposed sale of Royal Mail to a foreign billionaire for £3.6bn will be a windfall for some investors, but others will lose out if the deal goes ahead.

Ministers have given the go-ahead to Czech tycoon Daniel Kretinsky to buy the postal service’s parent company, International Distribution Services (IDS), for 370 pence per share.

That paves the way for Royal Mail to fall into foreign hands for the first time in its 508-year history.

The final decision will rest with shareholders, who must vote to approve the deal, while regulators can still have a say.

So what does it mean for investors? Will they make or lose money on the deal? Is there still time for others to take advantage?

Anyone who bought Royal Mail shares when it was listed on the London stock market more than a decade ago is likely to receive a small windfall.

Shares were sold at 330 pence each when the coalition government privatized the company in 2013.

Kretinsky, known as the Czech Sphinx, is now offering to pay 370 pence for each share. That represents a gain of 40p per share for those who bought at 330p.

Due to overwhelming demand at the time of privatization (700,000 citizens applied for shares), retail investors were allowed to purchase a maximum of 227 shares each.

Those who bought the maximum paid £749.10. They will now receive £839.90 if the sale to Kretinsky, 49, goes through. This equates to a profit of just over £90.

Postal workers will do better. Some 150,000 employees, including postos, received 613 shares worth just over £2,000 each in the privatization.

Employees who have retained all their shares will earn £2,268 if the deal goes through.

Therefore, the acquisition may seem attractive to both employees and those who bought shares in the company in the beginning. Others will have bought and sold shares since privatization.

Some will make considerable profits. Others with great losses. The shares hit a high of 631 pence in 2018.

Someone who bought £1,000 worth of shares at this price will only get £586 on the purchase.

But an investor who bought when Royal Mail shares fell to 118p in 2020 is now winning. A share costing £1,000 at the time is worth £3,136 under the terms of the deal.

Shareholders now have to make a decision after the Government approved the Czech businessman’s offer.

Once investors who own 75 percent of the shares back the deal, it will go ahead unless it is blocked by regulators.

Last night the shares closed up 0.8 per cent, or 2.8 pence, at 361.8 pence, which is below the offer price and suggests there is still some doubt over whether the deal will go ahead.

An investor who bought £1,000 worth of shares at 362p today would make around £22 if the purchase takes place at 370p.

This may actually be less than the trading fees, so it may not be worth it unless an investor is willing to pump in a lot of cash. And if the deal is blocked by investors or regulators, the share price may fall.

As such, investors may be tempted to sell their shares now, even if they are trading at a price slightly lower than the 370p they will get in the acquisition.

Richard Hunter, head of markets at brokerage Interactive Investor, said: “For investors, it is a matter of deciding whether they believe the deal will go through, which seems more likely, although it is not guaranteed.”

‘Government approval is undoubtedly one of the last and most important obstacles.

‘The news sent IDS shares up to 362p, against a bid of 370p.

«The reason for the discrepancy between these prices is that the market recognizes the certainly unlikely result that the shareholders do not approve the operation or that the Competition and Markets Authority decides to investigate the acquisition.

‘If the deal were to fail, shares would fall sharply.

‘The current share price suggests the deal is more likely to be approved, in which case current IDS holders could wait until the 370p is received, probably early next year.

“By the same token, however, it is necessary to recognize that this is not yet a secure agreement.”

Dan Coatsworth, investment analyst at investment platform AJ Bell, said: “The news from the government and unions means the fate of the company is now in the hands of shareholders.

“They have to choose whether to accept the deal or not.”

He added: ‘The final stages of the acquisition appear to be a formality and the clock is counting down towards IDS’ likely exit from the UK stock market.

“It has been a whirlwind ride for investors who originally bought at 330p in 2013, saw the share price surpass 630p in 2018 and hit a record low of 118p in 2020.”