Mergers Watchdog Probes Top Daisy Investors

The City's mergers watchdog has launched a secret probe that could lead to one of Britain's biggest fund managers being forced to reduce its stake in Daisy, a £385m telecoms group.

Sky News has learnt that the Takeover Panel is investigating whether Invesco Perpetual and Oakley Capital (LSE: OCL.L - news) have been colluding over their combined shareholding in Daisy, which totals approximately 36%.

Under City rules, any investor or group of investors deemed to be a so-called concert party can be ordered to make a mandatory offer to purchase the remaining shares in a listed company if they hold a stake of at least 30%.

Such a measure being imposed, which would involve an offer being made to all other shareholders, is unprecedented, however.

More plausible outcomes if Invesco (NYSE: IVZ - news) and Oakley were to be defined as a concert party would be for the Takeover Panel to order them to reduce their collective stake to below 30% or to disburse part of it among the remaining investors.

Daisy, which provides broadband, cloud and telecoms services to companies, has grown rapidly in recent years.

Both Liberty Global and Vodafone have examined takeover bids for the company in the past year although no live discussions are understood to be taking place.

Daisy's chief executive, Matt Riley, has become a prominent figure in the business community.

Banking sources said on Tuesday that the Takeover Panel had written to both Oakley and Invesco to ask for their views about whether they should be held to be acting in concert.

The probe is understood to have been launched because Invesco, which owns just over 22% of Daisy, and Oakley, which holds approximately 14% of the telecoms services group, are connected more broadly.

Invesco is also a major shareholder in Oakley's listed vehicle, whose shares also trade on the London Stock Exchange (Other OTC: LDNXF - news) .

Oakley is understood to have argued in its reply to the Takeover Panel that its listed entity exerts no management control of the holding in Daisy.

The situation is further complicated by the presence on Daisy's shareholder register of Woodford Investment Management, the new venture set up by Neil Woodford, arguably the UK's best-known fund manager.

Mr Woodford left Invesco, where he had built the firm's shareholding in Daisy, several months ago.

Initially, he collaborated with Oakley on the launch of his new business, although a statement last month said that the two "no longer [have] an operational relationship".

Woodford Investment Management holds just under 4% of Daisy although it is unclear whether the Takeover Panel has also written to it as part of its inquiry.

The affair surrounding Daisy's ownership may result in public statements from the parties involved, insiders said, with a resolution to the situation possible within days.

The mergers watchdog regularly conducts inquiries of this nature to establish whether parties are acting in concert, although it is rare for them to become public.

Recent examples include the controversy surrounding Bumi Resources (Jakarta: BUMI.JK - news) , a company comprising Indonesian coal assets which led to a public row involving Nat Rothschild, the billionaire financier.

The Takeover Panel, Daisy, Invesco, Oakley and Woodford declined to comment.