Royal Mail's Parent Company Considers Improved Takeover Bid From Czech Tycoon

Royal Mail's Parent Company Considers Improved Takeover Bid From Czech Tycoon

The board of International Distributions Services (IDS) is contemplating endorsing a revised £3.5 billion acquisition offer from Czech billionaire Daniel Kretinsky, also known as the “Czech sphinx.” This improved bid, put forward by Kretinsky's conglomerate EP Group, includes 360p per share in cash along with dividends, with an 8p per share special dividend that hinges on the successful completion of the transaction. Notably, the proposal signifies a significant 72.7% premium over IDS's share price on the day EP Group's interest was unveiled, following an initial bid of 320p per share that was rebuffed by IDS due to opposition from major shareholders like Redwheel.

Following the offer, IDS's shares experienced a notable uptick, closing at 314¾p on the London Stock Exchange, still falling short of EP's proposed price. Keith Williams, the chairman of IDS, hinted at the board's inclination to advocate for the offer to shareholders, deeming it a "fair and reflective" valuation of the growth strategies at GLS, Royal Mail's European logistics arm. Williams also highlighted Royal Mail's positive progression in adapting to the diminishing demand for traditional mail and the escalating need for parcel deliveries. Furthermore, EP Group has indicated a willingness to adhere to contractual commitments to safeguard key public interest considerations and acknowledge Royal Mail's essential role as part of the national infrastructure.

EP Group's improved bid arrived shortly before a 5pm deadline for either committing to a firm offer or withdrawing, with the deadline extension granted until May 29. While the takeover proposal has garnered some support, it is encountering resistance from the Communication Workers Union (CWU), advocating for the protection and potential nationalisation of Royal Mail. Labour's shadow business secretary, Jonathan Reynolds, has emphasized the necessity for robust assurances regarding Royal Mail's future, a sentiment echoed in ongoing discussions between IDS and EP Group. Kretinsky has explicitly pledged to safeguard IDS from a breakup, protect the group's pension scheme, and avoid compulsory job cuts, positioning the potential acquisition within a challenging period for Royal Mail amidst industrial disputes and market shifts.