Billionaire interest

Labour ‘sees benefit’ of Czech bid for Royal Mail

Royal Mail and post
Royal Mail is seeking a settled future (pic: Terry Murden)

Shares in the owner of Royal Mail rose sharply as the Labour party indicated that it would not oppose a Czech billionaire bidding for the company.

EP Group, a conglomerate controlled by Daniel Kretinsky, revealed on Tuesday that it had made a “non-binding indicative proposal” to the board of International Distributions Services (IDS), Royal Mail’s parent company.

IDS was criticised for not informing shareholders immediately of the proposal on 9 April.

Vesa, a Luxembourg-based vehicle of EP Group’s investors, is the largest shareholder in IDS, with a stake of about 27.6%. EP Group said it was seeking a recommendation for a possible cash offer for the remainder of the shares.

In a statement after the stock market closed on Wednesday, IDS said it had rejected a 320p-a-share approach after concluding it “significantly undervalues IDS and its future prospects”.

Despite the rejection, EP Group said it would continue “to engage constructively” with the board as it considers “all its options”.

Shares in IDS have fallen by two-thirds since Royal Mail was privatised in 2013 at 330p-a-share. They closed up 29% at 276p valuing it at £2.5 billion.

Any bid for Royal Mail is bound to be controversial and almost certain to concern the trade union which represents a workforce that has regularly taken industrial action over pay and changes proposed by management. Emma Gilthorpe is set to take charge as chief executive at the start of May.

However, Jonathan Reynolds, Labour’s shadow business secretary, met Mr Kretinsky at the World Economic Forum in Davos in January and the party is understood to believe he would be a positive influence at Royal Mail.

Its tentative support is in line with the party’s attempt to be seen as business-friendly and less inclined to obstruct market forces.

Even the unions have shown a willingness to back investors who will create a more viable business fit for a digital age.

The Communication Workers Union, which represents tens of thousands of Royal Mail employees, said: “The truth is handing over the ownership of one of the UK’s most prestigious institutions to a foreign equity investor cannot be right. But neither is the current model or direction of the company.

“The truth is, Royal Mail needs a new ownership and governance model that builds a postal service for the workers and customers and not one built solely focused on shareholder payouts and driving down the service and the terms and conditions of the workers.”

Mr Kretinsky, 48, owns about 10% of Sainsbury’s and 27% of West Ham United football club.

Under the City’s takeover code, EP Group has until 15 May to announce a formal offer or walk away.

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