London24NEWS

Czech billionaire ups bid for Royal Mail proprietor IDS to £3.5bn

  • IDS previously rejected a £3.2bn offer last month as ‘opportunistic’ 
  • But the board is now ‘minded’ to recommend the offer to shareholders 
  • IDS says it has secured commitments from EP Partners for future of service  

Czech billionaire Daniel Kretinsky has delivered a sweetened takeover offer for Royal Mail owner International Distribution Services.

The 370p-per-share offer, which values IDS at £3.5billion, follows a rejected bid of 320p per share last month.

IDS chair Keith Williams told investors the board is ‘minded to recommend’ the offer, which he described as ‘fair’ and accurately reflecting ‘the progress being made at Royal Mail to adapt the business to a significant fall in the demand for letters and growth in parcels’.

Kretinsky, known as the Czech Sphinx, has privately made assurances that there would be no compulsory redundancies as part of his plans

Kretinsky, known as the Czech Sphinx, has privately made assurances that there would be no compulsory redundancies as part of his plans

The offer values IDS shares at an eye-watering 72.7 per cent premium to their closing price on 16 April, before Kretinsky’s EP Partners made the initial offer. 

IDS shares rose another 19.6 per cent to 324.6p in late afternoon trading on Wednesday.  

Royal Mail, which was privatised in 2013, is struggling with heavy losses and missed delivery targets.

IDS has been begging Ofcom to ‘accelerate’ a review that would let it slash services and save cash.

Williams continued: ‘It is however regrettable that despite four years of asking, the Government has not seen fit to engage in reform of the Universal Service and thus improve our financial position and ensure that Royal Mail could provide an economically sustainable service to the British public.

‘The board believes that the proposed contractual undertakings to be offered by EP Group should ensure that IDS continues to deliver the key elements of the Universal Service in the UK and protect the interests of the workforce at both Royal Mail and [North American and European parcel delivery service] GLS.’

Kretinsky, known as the Czech Sphinx, has privately made assurances that there would be no compulsory redundancies as part of his plans following concerns raised by unions.

He has also promised not to split up parent company International Distributions Services.

Kretinsky, 48, already owns 27.5 per cent of IDS and co-owns West Ham United and holds a stake in Sainsbury’s.

A deal with EP Group would see Royal Mail taken into foreign ownership for the first time since it was established by Henry VIII in 1516.

Chancellor Jeremy Hunt last month voiced concerns over the offer, saying there were lessons to be learned from the crisis at Thames Water.

IDS told shareholders on Wednesday: ‘The board has sought, and EP Group has agreed to offer as part of the proposal, a set of contractual undertakings to protect key public interest factors and recognise Royal Mail’s status as a key part of national infrastructure.

‘It is anticipated that the commitment to offer these contractual undertakings to the UK Government would be reflected in the cooperation agreement between the parties if a firm offer is made.

‘Universal Service in the future, namely a one-price-goes-anywhere service for the entire United Kingdom and the continuance of six-day delivery for First Class letters, would be maintained.

‘EP Group has agreed to offer contractual commitments to protect employees’ current rights and continue to recognise the existing unions of both Royal Mail and GLS. The parties agree that Royal Mail’s name and brand should be protected, and Royal Mail should remain headquartered and tax resident in the United Kingdom.

‘While these and other aspects of Royal Mail’s status as a key part of national infrastructure are ultimately the Government’s responsibility to protect, the board feels a duty to raise these issues and seek to protect the public interest as well as the interests of employees before recommending a bid that would take IDS into private ownership.’