Royal Mail owner IDS rejects proposed bid from group led by Czech billionaire

A group led by West Ham shareholder and Czech billionaire Daniel Křetínský submitted a proposed takeover bid for Royal Mail owner International Distributions Services earlier this month, it has been revealed. 

EP Group said IDS rejected its initial proposal, but added that it ‘looks forward to continuing to engage constructively with the Board as EP Group considers all its options.’

In a statement on Wednesday, EP Group, controlled by Křetínský, said it submitted a ‘non-binding indicative proposal’ to the board of IDS seeking its recommendation for a possible cash offer for the chunk of IDS not already owned by EP Group and its affiliates. 

Rejected: Royal Mail owner IDS rejected a 

Following the release of the statement, IDS shares surged 18.11 per cent or 38.80p to 253.00p, giving the business a valuation of around £2.5billion.

The UK has seen an upturn in approaches for its London-listed companies, which have struggled with low valuations. 

EP Group said: ‘EP Group recognises that Royal Mail is in a challenging situation.

‘Weak financial performance, poor service delivery and a slow transformation, in the face of a market going through structural change, have put the business under unsustainable pressure. 

‘With the increasing competition from multinational companies in the UK postal market, private investment in Royal Mail becomes crucial.’ 

Křetínský, who through Vesa Equity Investment is the biggest shareholder in Royal Mail’s London-listed parent IDS, has reportedly been working with advisers informally in recent months to consider taking over the business. A successful takeover bid would give Křetínský full control of IDS.

Křetínský, a former lawyer-turned-energy-tycoon known as the ‘Czech Sphinx’, holds a 27 per cent stake in IDS via investment vehicle Vesa Equity Investment that he founded in 2018 with business partner Patrik Tkac. Vesa Equity also has a stake in J Sainsbury and Foot Locker.

Ambitious: Daniel Křetínský parts owns West Ham and is the biggest shareholder in IDS

IDS comprises two businesses, including international parcels network General Logistics Systems based in Amsterdam, and the Royal Mail business in the UK. 

Royal Mail has faced multiple issues over the last few years, with strikes by postal workers, a cyber security incident, a fine from regulator Ofcom for missed delivery targets and losing a 360-year monopoly to deliver parcels from post office branches, all taking a toll.

Earlier this month, Royal Mail proposed a number of operational changes in a bid to save £300million a year.

Royal Mail wants to deliver all non-first class and second class mail every other weekday, amid regulator Ofcom’s call for universal service reform due to falling letter volumes.

Under the proposals, the delivery of standard bulk business mail for things like bills or statements would be ‘aligned to Second Class’, so they would arrive within three weekdays instead of two.

Royal Mail said it wanted to maintain daily deliveries of first class letters between Monday and Saturday under the new proposals it has set out for reform.

The government previously opposed the reduction of a six-day service.

Parcel deliveries would be unchanged and still be delivered ‘up to seven days a week’, it said.

IDS delivered 20billion letters to 28million addresses in the 2004-5 financial year, but expects the number of letters it delivers to fall to 7billion this year.