Royal Mail owner agrees to ₤3.6 billion takeover by Czech billionaire Kretinsky

Royal Mail’s parent company International Distributions Services said on Wednesday it had agreed to a 3.57 billion pound ($4.55 billion) formal takeover offer by Czech billionaire Daniel Kretinsky.

The offer valued IDS, which owns Royal Mail and international parcels network GLS, at 370 pence per share.

“The IDS Board has negotiated a far-reaching package,” Chairman Keith Williams said in a statement.

It includes the provision of the ‘one-price-goes-anywhere’ Universal Service

Obligation, the maintenance of employee benefits and pensions and ensuring Royal Mail remains headquartered and tax resident in the UK, he added.

“The scale of the commitments we are offering to the company and the UK Government reflect how seriously we take this responsibility, to the benefit of IDS’ employees, union representatives and all other stakeholders,” Kretinsky said.

Royal Mail has been trying to transform itself into a parcel-led business as letter volumes declined sharply over the years.

Kretinsky has said that private investment in Royal Mail was crucial given its challenging situation with poor service delivery, slow transformation and increasing competition.

Any takeover bid for Royal Mail would be subject to “normal” national security scrutiny but it would not be opposed in principle, Finance Minister Jeremy Hunt said earlier.

The opposition Labour Party’s Jonathan Reynolds had written to Kretinsky seeking safeguards, including that Royal Mail remained domiciled and headquartered in the UK and paid taxes in the country, the party said in a statement earlier this month.

A UK national election will be held on July 4.

Kretinsky’s investment vehicle EP Group raised its bid earlier this month for the shares he does not already own in IDS to 370 pence per share after a previous bid of 320 pence was rejected by the London-listed firm in April.

VESA Equity owns Kretinsky’s IDS stake of about 27.6%. EP is a 100% shareholder in VESA Equity.

Last week IDS posted a narrower pre-tax annual loss and announced a special dividend.