Czech billionaire offered to buy owner of Royal Mail
The owner of Royal Mail received a £3bn takeover offer from a Czech billionaire who has stakes in Sainsbury’s and West Ham United football club. Daniel Křetínský approached International Distributions Services (IDS), the owner of the struggling British postal company, this month.
In a statement, Křetínský’s EP Group said the proposal, made on 9 April, had been rejected by IDS but it “looks forward to continuing to engage constructively with the board”.
IDS said it had unanimously rejected the proposal on 11 April and that Křetínský had offered 320p a share, significantly more than the share price before his interest emerged, valuing the group at £3.1bn. Shares in IDS increased 29% to 276p yesterday, valuing it at £2.6bn.
Křetínský has built up a 27.5% stake in Royal Mail through his investment vehicle, Vesa. He has various business interests, from energy companies to media assets to football clubs.
EP said it “recognises that Royal Mail is in a challenging situation. Weak financial performance, poor service delivery and a slow transformation, in the face of a market going through structural change, have put the business under unsustainable pressure.
“With the increasing competition from multinational companies in the UK postal market, private investment in Royal Mail becomes crucial.”
IDS said: “The board believes the timing of the proposal is opportunistic. It does not reflect the growth potential and prospects of the company under a new management team, a significant modernisation programme under way at Royal Mail, and the ongoing review by Ofcom.”
IDS comprises Royal Mail, which has a mandate to deliver nationwide at a fixed price six days a week under the universal service obligation, and GLS, an international parcel delivery group based in Amsterdam.
EP has until 15 May to announce a firm intention to make an offer for IDS or walk away.
Royal Mail is at a crossroads in its corporate future. The industry regulator, Ofcom, has suggested it may allow the postal firm to scale back its universal service obligations in the face of mounting losses.
In a review published in January Ofcom laid out options for the future of the postal service, including cutting letter delivery from six days a week to five or three, with a more
expensive option retained to allow for next-day deliveries.
Rishi Sunak said the government would oppose any reduction in the six-day-a-week service. In response, Royal Mail has asked the regulator to let it reduce deliveries of second-class letters to two or three days a week, cutting nearly 1,000 jobs and saving £300m a year in the process.
A takeover bid would be studied under national security laws. In 2022 the government told Royal Mail it would study an increase in Křetínský’s stake under the National Security and Investment Act but that investigation was called off.
Labour has yet to make its position on the future of Royal Mail clear, although Kate Osborne, the MP for Jarrow who worked at the company for 25 years, has said she would like to see it renationalised.