Offer recommended

Czech tycoon gives pledge as Royal Mail deal nears

Royal Mail and post
Assurances have been sought over the sale of Royal Mail (pic: Terry Murden)

A Czech billionaire has given undertakings that Royal Mail will remain headquartered and tax domiciled in Britain if shareholders accept his revised takeover proposal.

International Distributions Services (IDS) said it had received and is prepared to recommend an improved 370p per share “non-binding” proposal from EP Group, a conglomerate controlled by Daniel Kretinsky.

The deal values the company at £3.5 billion and is made up of 360p per share in cash and the remainder in dividends, including an 8p per share special dividend “conditional upon completion of the transaction”.

It represents a 72.7% premium to IDS’s share price on 16 April, before EP Group’s interest first emerged. Shares in IDS leapt 19% to 323p before closing 43.4p (15.99%) higher at 314.8p.

IDS said the board “has sought, and EP Group has agreed to offer as part of the proposal, a set of contractual undertakings to protect key public interest factors and recognise Royal Mail’s status as a key part of national infrastructure”.

It added: “It is anticipated that the commitment to offer these contractual undertakings to the UK government would be reflected in the co-operation agreement between the parties if a firm offer is made.

“Under the proposed contractual commitments, key elements of the proposals Royal Mail has put forward for a financially sustainable universal service in the future, namely a one-price-goes-anywhere service for the entire United Kingdom and the continuance of six-day delivery for first class letters, would be maintained.

“EP Group has agreed to offer contractual commitments to protect employees’ current rights and continue to recognise the existing unions of both Royal Mail and GLS. The parties agree that Royal Mail’s name and brand should be protected, and Royal Mail should remain headquartered and tax resident in the United Kingdom.”

Royal Mail chief executive Keith Williams said it was “regrettable that despite four years of asking, the government has not seen fit to engage in reform of the universal service and thus improve our financial position and ensure that Royal Mail could provide an economically sustainable service to the British public.”

In a letter sent to Mr Křetínský, Labour’s Shadow Business Secretary Jonathan Reynolds called for safeguards over the retention of Royal Mail’s UK headquarters and tax base.

He said: “Whilst it’s important that Britain remains open and attractive to foreign investment, Royal Mail is an iconic British institution with a unique place in our society and infrastructure.

“Royal Mail is as British as it gets, and Labour will take the necessary steps to safeguard its undeniable identity and place in public life.”

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.