10 March 2004 Psion’s latest attempt to convince shareholders of the merits of selling its stake in Symbian to Nokia have backfired, sparking further opposition to the deal.
Psion chairman David Potter, answering shareholders’ questions on Monday, said the deal represented “good value” with “substantial returns”. But he upset some by claiming that an initial public offering (IPO) of Symbian stock was “very unlikely to occur”.
“We are not able to force an IPO because we need the agreement of all shareholders,” he said. “And we don’t believe that that is practicable… in the foreseeable future.”
But Potter’s opponents, led by the Phoenix Asset Management Partnership and private shareholder David Sharman, say he is being “weak” by not pursuing an IPO. They also claim that a future IPO would mean their stock is worth more than twice as much as the £136 million Nokia are paying Psion for its 31.1% share.
Sharman has emphasised that from the start, investment in the mobile operating system developer was “predicated on an IPO” and Symbian’s shareholders’ agreement states that a public offering was to be made before the end of 2003.
The passing of that deadline may seem to underline Potter’s concerns but a vocal and growing minority of Psion shareholders are convinced that a flotation would provide a better return on their investment than selling out to Nokia.
Potter believes waiting for an IPO risks stock depreciation, as Symbian is still losing money. “It is not our role to take highly speculative positions,” he said. “We’re not a venture capital company.” He added that a sale price of £136 million after investing only £28 million represented “a huge return over a relatively short period of time”.
Opponents of the sale are claiming that one-quarter of shareholders have pledged to vote against the deal on 12 March. A new group calling itself PSSION — Psion Shareholders for Symbian Independent Of Nokia — launched a campaign with an article in the Sunday Telegraph last weekend. Their article claimed the revolt represented “the biggest single corporate campaign mounted by private investors in a decade”.
Vociferous Psion investors are keen to refute Potter’s claim that an IPO is unlikely because Psion’s stock price is so closely linked to Symbian’s fortunes.
Psion has been regarded as a “tracking stock” for the privately held company for the last three years, since Psion quit the handheld market. Psion’s sale of its share in Symbian for a lower than expected price sent the message that Psion itself is losing value, hence the sharp drop in its share price that greeted the announcement in early February.
Meanwhile, the prospect of Nokia holding a majority stake is worrying Symbian’s other shareholders. Sony Ericsson has said it will only remain a part of the collaborative venture as long as Symbian does not become too closely identified with Nokia as a result of the sale. “The Symbian operating system should not be perceived as a proprietary system for any particular manufacturer,” said Sony Ericsson president Katsumi Ihara.