PA Media/dpa
London
The owner of Britain’s Royal Mail, International Distribution Services (IDS), has seen shares soar higher after it was revealed the group rejected a takeover approach from shareholder and Czech billionaire Daniel Kretinsky.
Kretinsky’s EP Group said it put forward an all-cash proposal on April 9 to buy the shares in IDS that it does not already own.
IDS confirmed that it had considered the offer but concluded that it “significantly undervalues IDS and its future prospects” and therefore the board unanimously rejected it on April 11.
It also branded the timing of the proposal as “opportunistic.” The group said: “It does not reflect the growth potential and prospects of the company under a new management team, a significant modernisation programme under way at Royal Mail, and the ongoing review by Ofcom in relation to the Future of the Universal Service Obligation.” The sprawling EP Group conglomerate - which has interests spanning energy, logistics and food retail - has already built up a stake of around 27.5% in the Royal Mail owner through Kretinsky’s Vesa Equity Investment vehicle, making it the biggest investor in IDS.
It said while the takeover proposal was rejected by the IDS board, it would continue to “engage constructively with the board as EP Group considers all its options.” Shares in IDS jumped nearly 30% in late Wednesday afternoon trading after news of the approach was confirmed following reports of bid interest.
EP Group said it recognizes the “challenging situation” faced by Royal Mail, but would be prepared to support “this iconic business as it transforms and rebuilds into a modern postal operator.” It said: “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.” It added that Royal Mail is an “important national asset that would benefit from being able to take a longer-term view.” The group said: “As a committed long-term investor in the UK, EP Group recognizes the importance of the Royal Mail business to its various stakeholders, including employees, trade unions, customers and government, as the UK’s sole designated universal service provider.
“EP Group has submitted its non-binding indicative proposal to IDS with the interests of these important stakeholders in mind.” EP Group has until May 15 to make a bid or walk away under UK takeover rules.
Kretinsky, who is said to be known as the “Czech Sphinx,” already has a raft of investments, including stakes in London football club West Ham United and supermarket giant Sainsbury’s.
