- 370p a share negotiated
- Agreement to protect UK postal system
The parent company of Royal Mail is “minded to recommend” a £3.5bn bid from Czech billionaire Daniel Křetínský, following weeks of negotiation.
International Distributions Services (IDS) has been offered 370p per share in the form of a non-binding proposal from EP Group, the European industrial giant controlled by Křetínský. This consists of 360p per share in cash, a final dividend for FY2024, and a special dividend conditional upon completion.
Last month, Křetínský, who is already IDS’s biggest single shareholder, proposed 320p a share, which the company described as “opportunistic”. The new proposal is 15.6 per cent higher, or 72.7 per cent above IDS’s closing price on the day before the first offer was made.
Keith Williams, chair of IDS, said the board “is minded to recommend this offer price, which it considers to be fair and reflects the value of subsidiary GLS’ current growth plans and the progress being made on change at Royal Mail to adapt the business to a significant fall in the demand for letters and growth in parcels”.
The board stressed that, as part of the proposal, EP Group has agreed to offer a set of contractual undertakings to protect key public interest factors. These include a one-price-goes-anywhere service for the whole of the UK and the continuance of six-day delivery for first-class letters.
“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,” the company said.
The exact scope of Křetínský’s undertakings and contractual commitments to the UK government has yet to be agreed. IDS also wants assurances that the courier will maintain an investment grade credit rating. It has already been decided that Royal Mail’s name and brand should be protected, and that it should remain headquartered in the UK.
Following an agreed extension, EP Group now has until 29 May to make a formal offer.
There is still a big question mark over whether the deal will be allowed to go ahead, however. The National Security and Investment (NSI) Act, which came into force in January 2022, gives the government the power to scrutinise and ultimately block business transactions to protect national security. While this legislation didn’t prevent Křetínský upping his stake above 25 per cent in 2022, a full takeover could spark a different government response.
