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Czech billionaire Daniel Křetínský has agreed to buy the owner of Royal Mail in a deal valuing the former UK postal monopoly at £5.2bn, as he pledged to revive the group’s fortunes away from the glare of public markets.
Křetínský’s EP Group has agreed to pay 370 pence a share for International Distribution Services, the London-listed parent company of Royal Mail. Including IDS’s debt, the deal values the group at £5.2bn.
EP Group and IDS have spent the past few weeks hammering out the details of a deal for one of the UK’s best-known companies, which since privatisation has been beset by strikes and the burden of having to deliver letters at a set price across the country.
The deal, which will now be considered by regulators, comes at the start of an election campaign and risks provoking further tensions with postal workers.
Křetínský is already the largest shareholder in IDS with a 27.5 per cent stake. A lawyer-turned-energy tycoon, he also owns stakes in supermarket chain J Sainsbury and English Premier League football club West Ham United.
Announcing the transaction on Wednesday, EP Group made commitments covering the early years of its ownership, including promises to preserve service levels and maintain the company’s UK headquarters.
Křetínský said that “IDS’s market is evolving quickly, and it must accelerate its transformation and investments into modernisation to keep up with the competition”.
EP Group’s offer follows years of losses and failures to hit performance targets at Royal Mail, which have seen IDS’s shares drop from more than 550p in 2018 to just 213p before EP Group’s first bid was announced in April.
If the deal wins regulatory approval, Křetínský’s ownership could have wide-reaching implications for the businesses and Britons who depend on its services.
While being required to meet Royal Mail’s historic universal service obligation to deliver everywhere in the UK for the same price, EP Group would face the challenge of declining demand for letters and growing competition for parcel deliveries from the likes of Amazon and DPD.
The Czech entrepreneur is seeking to take control of the 508-year-old postal group following a period of acrimonious relations between management and postal workers, who walked out for 18 days in 2022 over plans to bring working practices closer in line with competitors.
As well as Royal Mail, IDS also owns the fast-growing Netherlands-based parcels business GLS. The recommended offer, which includes restrictions on breaking up GLS from the broader 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 the offer from EP is fair and reasonable given that there are uncertainties ahead and allows investors to realise value at a significant premium,” said IDS chair Keith Williams.
