Czech billionaire Daniel Křetínský agrees to take over owner of Royal Mail in £5.2 billion deal

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Czech billionaire Daniel Křetínský has reached an agreement to take over the owner of Royal Mail in a deal that values ​​the group at £5.2 billion, as he vowed to revive the fortunes of the former British postal monopoly, away of the brilliance of the public markets.

Křetínský’s EP Group said on Wednesday it had agreed a takeover price of 370 pence per share for London-listed International Distribution Services, which owns Royal Mail and international parcel company GLS, paving the way for intense political scrutiny of the proposal during a British election. year.

EP Group and IDS have been working out the details of a deal for the former state-owned postal company in recent weeks, which has been plagued by strikes and increasing competition from the likes of Amazon since privatization.

The move to bring the 508-year-old postal service under foreign ownership comes with several commitments, including retaining its British headquarters, recognizing the postal workers’ union and maintaining Royal Mail’s obligation to deliver at the same cost everywhere in Britain to deliver mail. But these pledges are only for five years, with the Labor Party and the union already pledging to protect the group’s future.

Jonathan Reynolds, shadow business secretary, said the Labor Party, which is expected to win the July 4 general election, “will take the necessary steps to [Royal Mail’s] unmistakable identity and place in public life,” adding that “Labour in government will ensure it [EP Group’s commitments] are complied with”.

Daniel Křetínský has promised to revive Royal Mail’s fortunes © David W. Cerny/Reuters

Dave Ward, general secretary of the Communication Workers Union, said: “We welcome some of the commitments that have been made, but the reality is that postal workers in the UK have lost all confidence in Royal Mail’s senior management and the agency is deliberately deserted.”

He said the CWU would “work with the Labor Party and other stakeholders to call for a new ownership model for Royal Mail, where our members and customers have a direct say in key decisions”, adding that “this situation has a direct is the result of a failed and ideological privatization more than ten years ago.”

Jeremy Hunt, Chancellor, previously said a bid for Royal Mail would be subject to ‘normal’ scrutiny on national security grounds, but added that international investment in British companies was generally welcome.

Křetínský, a lawyer turned energy magnate, is already IDS’s largest shareholder with a 27.5 percent stake. His takeover bid for IDS marks his latest British dealmaking spree, after he acquired stakes in supermarket chain J Sainsbury and English Premier League football club West Ham United.

Křetínský said that “the IDS market is evolving rapidly and needs to accelerate transformation and investments in modernization to keep up with the competition.”

EP Group’s bid follows years of losses and failure to meet performance targets at Royal Mail, where IDS shares fell from more than 550 pence in 2018 to just 213 pence before the company’s initial bid was announced in April.

While meeting Royal Mail’s historic obligation to deliver at the same cost everywhere in Britain, EP Group would face the challenge of declining demand for letters and increasing competition in parcel delivery.

Previous attempts by IDS to reform the company in response to that competition were strongly opposed by postal workers, who walked out for 18 days in 2022 over plans to bring working practices closer to more modern rivals.

Line chart of the share price, pence, showing IDS shares falling short of the offer price

Shares in IDS rose 3 percent to 330 pence on Wednesday morning, significantly below the offer price, suggesting doubts over whether the deal will go ahead.

One top IDS shareholder said he was “disappointed” by the offer price, but warned that “if the deal falls through you will be stuck with a management team that did not want the company to remain listed and no longer appears to do so.” believe there is much value.”

Analysts have previously suggested that a takeover of IDS could lead to the breakup of Royal Mail and the more profitable GLS, a move strongly opposed by the postal union. EP Group’s recommended offer, which includes restrictions on splitting GLS from the wider IDS group for five years, comes just days after IDS said GLS had helped the group return to profit in the 12 months to March.

“The IDS board believes that EP’s offer is fair and reasonable given the uncertainties ahead and allows investors to realize value at a significant premium,” said IDS Chairman Keith Williams.

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