UK's Royal Mail Owner Nods to $4.4 Billion Takeover Bid From Czech Billionaire

By John Lopez

May 15, 2024 02:26 PM EDT

International Distributions Services (IDS), the owner of the UK's Royal Mail, is moving forward with considerations of a £3.5 billion ($4.4 billion) takeover bid from Czech billionaire Daniel Křetínský as the potential deal gains momentum.

Royal Mail
LONDON, ENGLAND - SEPTEMBER 12: A Royal Mail post box on September 12, 2013 in London, England.
(Photo : Photo by Peter Macdiarmid/Getty Images)

Czech Billionaire's $4 Billion Royal Mail Takeover Bid Gains Momentum

The Guardian tells us that Křetínský's investment vehicle EP Group tabled a revised bid of 370 pence per share last month, up from an initial offer of 320 pence per share, which IDS previously rejected. The increased bid, totaling £3.5 billion, has garnered attention and is now being seriously considered by IDS.

The improved bid represents a significant premium of about 73% to its share price before the initial bid was made public.

Keith Williams, IDS chairman, expressed that the board is inclined to endorse the proposed offer price. They believe it aligns with the fair valuation and acknowledges GLS' ongoing growth strategies and advancements in Royal Mail's transformation efforts.

The potential takeover has sparked political tension amid growing scrutiny of foreign ownership of critical UK infrastructure. 

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Workers' Rights, Pension Surplus, and National Infrastructure Concerns

If the deal proceeds, EP Group has committed to protecting employees' rights, recognizing existing unions, maintaining the Royal Mail brand, and keeping its headquarters in the UK. Additionally, EP Group has assured us it will honor Royal Mail's status as a key part of national infrastructure.

The potential takeover could trigger intervention from the British government under the National Security and Investment Act, which gives ministers a more significant say over deals involving critical infrastructure.

Křetínský's EP Group, through VESA Equity Investment, currently owns nearly 28% of IDS. IDS will publish its annual results on May 23, with Křetínský having until May 29 to make a formal bid.

The deal also holds potential benefits for shareholders, including postal workers, who stand to receive a special dividend if the takeover is completed. However, the specifics of the deal and its implications are yet to be fully determined, pending further developments in negotiations between IDS and EP Group.

Royal Mail was privatized in 2013 for £3.3 billion.

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