Mark Kleinman: Flybe might struggle for take-off without investors on board
Talk about a crash landing. The outrage of Flybe’s largest shareholder about the terms of its £2.2m takeover, articulated in a legal letter to the airline’s board last week, is at face value perfectly understandable.
On the full pre-flight checklist-worth of complaints from Hosking Partners, the most incendiary may be Flybe’s decision last year to switch its premium listing to a standard one – a move which enabled the sale of its operating assets without shareholder approval.
Hosking Partners, which holds 19 per cent of the regional carrier, is also angry at what it views as misleading guidance from directors about their intention to seek higher offers after recommending Connect Airways’ 1p-a-share bid.
There may, too, be something to Hosking’s argument that Flybe’s board should have kept investors more adequately forewarned that an offer was likely to emerge at a vast discount to its already-depressed share price.
And critics of the board argue that the timing of its decision to allow competing bidders Virgin Atlantic and Stobart Group to team up, for which there appears to be contradictory evidence, was taken without regard for shareholders’ interests.
Yet the headwinds facing Flybe as winter approached were neither unusual or difficult to see.
And in the announcement last November that directors were launching a formal sale process, there was a clear going concern warning focused on the risks that its credit card partners would further constrain liquidity.
Other investors may not be persuaded to join a legal fight in the face of Flybe’s directors’ insistence that a solvent 1p-a-share sale is superior to an administration yielding nothing for investors.
Ultimately, Hosking’s threat to seek a potential injunction preventing the takeover might prove fruitless. But the pain being felt by Flybe’s long-suffering investors suggests that sparking a legal battle may be cathartic, if nothing else.
Collins gets Decoded
What’s the biggest challenge facing British business in the next 25 years? Brexit and its aftermath? The rise of China and rival emerging economies? Defusing the growing pensions timebomb?
The answer may be all the above, but running them close is certain
to be equipping the nation’s workforce with relevant digital and data skills.
In the next few days, Decoded, the start-up whose co-founder Kathryn Parsons is one of the UK’s best-known tech entrepreneurs, will announce the next step in its efforts to play a role in that digital transformation.
Simon Collins, the respected former UK chairman of KPMG, will be unveiled as Decoded’s chairman as it targets an aggressive expansion.
Founded in 2011 with a pledge to teach coding in a day, the company is now rolling out its Data Academy product aimed at bringing technology knowhow into clients’ boardrooms – not before time.
A Brexit education
Dealmakers’ animal instincts are being kept in check by Brexit-related uncertainty, but there’s still M&A action to be found in the City.
One (small) deal that I understand has been signed in the last few days is an £80m takeover of Times Higher Education (THE), the universities bible, by Inflexion Private Equity.
Inflexion saw off competition from two sizeable trade bidders in the form of Relx, the FTSE-100 data
and science publisher, and Clarivate Analytics, once part of Thomson Reuters.
By the time its new owner sells THE, the Cabinet might just have resolved its differences over Brexit.
Mark Kleinman is the City Editor of Sky News. @MarkKleinmanSky