International Distribution Services (IDS), the owner of Royal Mail, has indicated it is leaning toward accepting a £3.5 billion takeover bid from Czech billionaire Daniel Kretinsky's EP Group. The improved offer of 370p per share, up from an initial 320p, values the postal service at a premium that IDS chairman Keith Williams described as 'fair'.
Kretinsky, whose EP Group already holds a 27.5% stake in IDS, has agreed to contractual undertakings to protect Royal Mail's public service commitments. These include maintaining six-day-a-week first-class letter deliveries, safeguarding workers' rights, preserving the Royal Mail brand and UK headquarters, and continuing the one-price-goes-anywhere service for domestic letters.
IDS shares surged 18% in afternoon trading following the announcement. However, any deal will face intense political scrutiny. Chancellor Jeremy Hunt has voiced concerns, drawing parallels with the ownership of troubled Thames Water. Labour's shadow business secretary Jonathan Reynolds has written to Kretinsky demanding safeguards to prevent Royal Mail from being operated overseas, stating: 'Royal Mail is as British as it gets.'
The Communication Workers Union (CWU) warned that the 'future of postal services in the UK is again under threat' and called for a new ownership model based on innovation and public service ethos. General secretary Dave Ward urged EP Group to commit to working with the union and rule out any break-up of the company or raid of the pension surplus.
The Greeting Card Association (GCA) also stressed that Royal Mail's service 'cannot be compromised'. Chief executive Amanda Fergusson said any undertakings must include legal service standards, not just first-class delivery commitments. Kretinsky has until 5pm on May 29 to make a firm offer.
