Royal Mail Buyout Bid Rejected, But Czech Billionaire Eyes Next Move

Royal Mail Buyout Bid Rejected, But Czech Billionaire Eyes Next Move

Royal Mail Buyout Bid Rejected, But Czech Billionaire Eyes Next Move

London, England – A potential shake-up for Royal Mail is afoot, with the company’s owner, International Distribution Services (IDS), rejecting a takeover bid from its biggest shareholder. However, the story doesn’t end there, as the plot thickens with the potential for a renewed offer.

Czech billionaire Daniel Kretinsky, already holding a hefty 27.5% stake in IDS, made a cash offer earlier this month to acquire the remaining shares and take full control. While this initial bid was rebuffed, Mr. Kretinsky’s company, EP Group, remains intent on securing ownership of the entire business.

EP Group released a statement expressing their intention to “engage constructively” with the IDS board while “considering all its options.” UK takeover regulations grant EP Group until mid-May to formulate a new bid for IDS or relinquish their pursuit entirely.

Who is Daniel Kretinsky?

Mr. Kretinsky significant ownership in Royal Mail has attracted scrutiny in the past. However, a government review investigating national security concerns surrounding his IDS investment ultimately cleared the way for him to maintain his stake.

Beyond Royal Mail, Mr. Kretinsky’s business interests extend to other sectors. He holds ownership shares in West Ham Football Club and supermarket giant Sainsbury’s. His primary business vehicle, EP Group, boasts a diverse portfolio encompassing energy, logistics, and food retail.

Royal Mail’s Ups and Downs Since Privatisation

Royal Mail’s journey since privatisation in 2013 has been far from smooth. In 2022, the company’s parent company on the London Stock Exchange underwent a name change, becoming International Distribution Services. Recent years have seen Royal Mail grapple with postal worker strikes and fines for failing to meet delivery targets.

The decline in traditional letter deliveries has also taken a toll on the company’s finances. In 2022, the chairman revealed a daily financial loss exceeding £1 million. To address these challenges, Royal Mail recently proposed a plan to eliminate Saturday second-class letter deliveries and reduce weekday deliveries to every other day.

EP Group Champions Private Investment

EP Group acknowledges the “challenging situation” Royal Mail faces. In their statement, they highlight “weak financial performance, poor service delivery and a slow transformation.” They argue that these factors, coupled with a rapidly changing market landscape, have placed the company under immense pressure.

EP Group views private investment as the key to Royal Mail’s revival. They emphasise the importance of such investment in light of “increasing competition from multinational companies in the UK postal market.” They believe that being freed from the constraints of public ownership would allow Royal Mail to take a more long-term view and invest in its transformation into “a modern postal operator delivering high-quality service to its customers, stability to its workforce and sustainable financial performance.”

The news of the rejected takeover bid sent ripples through the market, with IDS’s share price experiencing an 18% surge on Wednesday afternoon. The saga surrounding Royal Mail’s ownership is far from over, with all eyes now fixed on EP Group’s next move.

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