Royal Mail chair in charm offensive to thwart Czech bid
The chair of Royal Mail’s owner is to launch a charm offensive on investors in an attempt to convince them of its strategy in the face of a potential £3.1bn hostile takeover by a Czech billionaire.
Last week, it emerged that the postal firm’s parent company, International Distributions Services (IDS), had received a preliminary offer from Daniel Křetínský, an energy tycoon whose company, EP Group, is its largest shareholder.
Yesterday, IDS said its chair, the former British Airways boss Keith Williams, and its chief executive, Martin Seidenberg, would arrange meetings with top investors this week at which bosses would “make clear why the offer from EP Group significantly undervalues IDS and is highly opportunistic”.
Seidenberg is attempting to turn around the fortunes of the loss-making Royal Mail and continue to grow the group’s international parcels arm, GLS.
It had been assumed that Křetínský wanted to carve out the profitable GLS and sell the business off, but he has denied that this is his plan. He is reportedly considering making an improved offer and has until 15 May to make a formal bid.
The company’s management team will hope to convince investors to share the view of Redwheel, its third largest shareholder, which holds 6.65% of the shares. Its investment manager told the Sunday Times it did not believe it was in the interests of shareholders, employees or customers for Royal Mail to be “broken up or sold off”.
In an attempt to address the collapse in letter volumes over the past two decades, the watchdog laid out potential reforms earlier this year, including allowing Royal Mail to cut the number of delivery days to five or even three days a week. Rishi Sunak has said the government will oppose any cuts to the six-day service.
IDS has asked the industry regulator to let it reduce deliveries of second-class letters to two or three days a week, which would mean the loss of almost 1,000 jobs and save £300m a year. The company promised to retain a six-day-a-week service for first-class letters and seven days for parcels.
Williams said: “Today we have published the full detail behind our proposal for universal service reform. The proposal is based on detailed modelling and customer testing and does not require legislation.
“The lack of universal service reform by government and Ofcom over the past four years has held back Royal Mail’s transformation and urgent action is needed.”
IDS will publish its annual results on May 23. Its shares rose more than 1% yesterday to 276p, still well below the 320p a share that EP has offered.
Royal Mail was privatised and split from the Post Office in 2013. Křetínský, who also has stakes in Sainsbury’s and West Ham United, bought into the company in 2020, and later ramped up his stake to 27.5%.
In 2022, the government told Royal Mail it would scrutinise an increase in Křetínský’s stake under the National Security and Investment Act. However, that investigation was called off later in the year. Any future bid could still be examined by regulators.
A spokesperson for Ofcom said: “We believe it’s important there’s a national debate, so everyone can have their say before we make any recommendations or proposals to secure its long-term future.
“Under any scenario, Royal Mail must modernise its network, become more efficient and improve its service levels.”