Royal Mail agrees £3.5bn takeover with Czech billionaire

The parent company of Royal Mail, International Distribution Services (IDS), has struck a takeover deal with Czech billionaire Daniel Křetínský, having agreed to a “far-reaching package of legally binding” safeguards. 

EP Group, the European industrial giant controlled by Křetínský, is set to pay 370p per IDS share. This will consist of 360p per share in cash, a final dividend for FY2024, and a special dividend which will only be paid if the deal becomes unconditional. Křetínský will pay £3.5bn but including IDS’s debt, the deal values the group at £5.2bn.

The offer represents a 73 per cent premium to the courier’s pre-offer closing price and IDS directors intend to recommend unanimously that shareholders should accept the offer. Keith Williams, chair of IDS, said the board had negotiated a “far-reaching package of legally binding undertakings and commitments which provide our customers, employees and broader stakeholders with important safeguards”.

These include a commitment to the ‘one-price-goes-anywhere’ system, the delivery of first class letters six days a week, the financial stability of the group, the maintenance of employee benefits and pensions, and ensuring Royal Mail remains headquartered and tax resident in the UK. The safeguards will only last for five years after the acquisition takes place, however.

Křetínský said he had “the utmost respect for Royal Mail’s history and tradition” and that EP group is a “patient, supportive investor”. He added that the deal would allow IDS to focus on long-term growth, “free from the short-term financial goals and dividend pressures of the public markets”.

Yesterday, IDS reported a full-year adjusted operating loss of £28mn, compared with a loss of £71mn the year before. Profit of £320mn at GLS was offset by an adjusted loss of £348mn at Royal Mail.