Czech billionaire cleared to swoop on Royal Mail
A BILLIONAIRE known as the ‘Czech Sphinx’ has been given the go-ahead to tighten his grip on Royal Mail – and even launch a full-blown takeover bid.
Daniel Kretinsky controls 22pc of Royal Mail parent company International Distributions Services (IDS) through his vehicle Vesa Equity.
In August, then-Business Secretary Kwasi Kwarteng launched a national security review after the tycoon moved to increase his stake in the company to more than 25pc.
But IDS said it has been notified by current Business Secretary Grant Shapps that ‘no further action’ would be taken against Kretinsky should he increase his stake.
That effectively clears the way for the billionaire to raise his investment in the parcel carrier – or even launch a takeover.
Shares in IDS jumped 5.8pc, or 11.3p, to 205.1p following the news.
The rally will come as welcome respite for the company, which changed its name to IDS last month and has threatened to split the business in two, casting doubt over the future of Royal Mail even before the ruling by Shapps.
While the international parcels delivery arm Global Logistics Services (GLS) is thriving, the struggling Royal Mail business in the UK is locked in a bitter dispute with unions and losing £1m a day.
Kretinsky has previously hinted he could expand his stake in the company above 25pc, which would require him to inform markets.
Under City rules, the tycoon would be obligated to make a takeover offer for the firm if his stake rose to 30pc.
Analysts at broker Peel hunt said the news was ‘clearly positive’ for IDS but it remained to be seen whether Kretinsky would up his stake in the group.
Meanwhile, Liberum said the decision removed a ‘potential block on IDS being acquired’ which would support the share price in the short term despite the ‘significant structural challenges’ facing Royal Mail. Kretinsky, who built his fortune through infrastructure and power assets in central and Eastern Europe, has invested in other British companies including supermarket chain Sainsbury’s and also holds a 27pc stake in
Premier League football club West ham United.
Alex Irving, an analyst at Bernstein, said it was ‘not clear’ what Kretinsky’s end game was at IDS, but admitted there was ‘nothing stopping him’ from buying it.
Meanwhile, AJ Bell’s Russ Mould said the billionaire was likely to be more interested in GLS, the company’s more profitable international arm, rather than the troubled Royal Mail business.
‘Royal Mail remains racked by competition and industrial unrest – it continues to run at a loss and is consuming cash,’ Mould said, adding that any overseas takeover would ‘surely’ be blocked by the Government.
‘GLS, however, is an entirely different matter,’ he said.
‘It is profitable and although rising fuel and other costs will be a challenge it appears better placed to tackle them than Royal Mail.
‘Any break-up of IDS could perhaps give Mr Kretinsky a chance to cherry-pick this asset.’
The IDS share price boost also came as the Communication
Workers Union (CWU), which represents around 115,000 Royal Mail workers, called off strikes that had been planned for the next two weeks following a legal challenge by the company.
The CWU said on Sunday it had scrapped planned walkouts between November 2 and 10 although strikes would resume on November 12. Royal Mail and the CWU are in a dispute over wages.
‘No further action to be taken’