Křetínský Offers £3.57 Billion for Royal Mail, UK Approves Deal

This offer, made through his company EP Group, values the firm at £3.57 billion (approximately 103.5 billion CZK). Křetínský increased his original offer from 320 pence per share to 370 pence, which the company had previously rejected in April. In addition to the loss-making Royal Mail, he also owns the profitable international parcel network GLS.

Keith Williams, Chairman of the Board of International Distributions Services, announced that the board had negotiated a comprehensive package of commitments. These commitments include providing universal services at a single price, maintaining employee benefits and pensions, and ensuring that Royal Mail remains headquartered in the UK and continues to pay taxes there.

Royal Mail, which has been operating for over 500 years and employs more than 150,000 people, is held in high regard by Křetínský. He stated that the commitments his company offers reflect the seriousness with which he approaches this responsibility.

Křetínský told Reuters that Royal Mail and GLS need immediate investments to maintain their market share and adapt to changing market trends. According to him, it is crucial for logistics companies to seize the opportunity to deliver parcels to locations other than the customer's residence. If the group does not respond to this trend, it could negatively impact its market share, especially in the UK, where it could be critical.

UK Business and Trade Secretary Kemi Badenoch has the authority to review and potentially block the sale agreement under the National Security and Investment Act. Chancellor Jeremy Hunt stated that any offer to take over Royal Mail would be subject to standard national security reviews, but he would not oppose it in principle.

The largest union at Royal Mail announced that its representatives would meet with EP Group representatives next week. The union also plans to discuss a new ownership model for the company with the Labour Party and other stakeholders. Jonathan Reynolds, Labour's shadow business secretary, welcomed the assurances provided by Křetínský and said a Labour government would ensure they were upheld.

According to the BBC, markets expect that there is a possibility that the current or any future government might block the transaction. Shares of Royal Mail's parent company are trading at a discount to the 370 pence offered by Křetínský, indicating that some investors doubt the deal will go through. On the other hand, the government did not intervene in 2022 when Křetínský increased his stake in International Distributions Services to 27.5%.

On Tuesday, shortly after trading began on the London Stock Exchange, shares of International Distributions Services rose by more than three percent to 332 pence each. The offer price of 370 pence represents a 53.1% premium to the twelve-month volume-weighted average share price, with shares not trading at this price since March 2022.

Last week, International Distributions Services announced that for the fiscal year ending March 2024, it reduced its pre-tax loss to £75 million from £110 million the previous year. The company also stated that it would pay a special dividend.