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The chair of Royal Mail’s owner is to conduct a charm offensive with investors in an attempt to convince them of its strategy, in the face of a potential £3.1bn hostile takeover by a Czech billionaire.
Last week, it emerged that the postal firm’s parent company, International Distributions Services, had received a preliminary offer from Daniel Křetínský, an energy tycoon whose company, EP Group, is its largest shareholder.
On Monday, IDS said its chair, the former British Airways boss Keith Williams, and its chief executive, Martin Seidenberg, will meet with top investors this week.
Williams said at the meetings bosses would “make clear why the possible offer from EP Group significantly undervalues IDS and is highly opportunistic”.
Seidenberg is attempting to turn around the fortunes of the loss-making Royal Mail, and continue to grow the group’s international parcels arm, IDS.
Křetínský, known as the “Czech Sphinx” for his low profile and inscrutable approach, is reportedly considering making an improved offer for IDS and has until 15 May to make a formal bid.
The company’s management team will hope to convince investors to share the view of Redwheel, its third largest shareholder, which holds 6.65% of the shares. The manager of its investment told the Sunday Times it did not believe it was in the interests of shareholders, employees or customers for Royal Mail to be “broken up or sold off”.
Redwheel piled pressure on the industry regulator, Ofcom, to allow reform of the universal service obligation (USO), which requires Royal Mail to distribute nationwide for one price, six days a week.
The watchdog laid out potential industry reforms earlier this year, including allowing Royal Mail to cut the number of delivery days to five or even three days a week. Rishi Sunak has said the government will oppose any cuts to the six-day service.
Williams’s comments came as IDS submitted its detailed response to the potential reforms. In a summary of its response, published earlier this month, it asked the industry regulator to let it reduce deliveries of second-class letters to two or three days a week.
The plan involves cutting nearly 1,000 jobs and saving £300m a year in the process by reducing daily delivery routes by 7,000-9,000. The company promised to retain a six-day-a-week service for first-class letters and seven days for parcels.
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The detailed plan included adding new reliability targets for first– and second-class services and introducing tracking on parcels delivered under the USO.
Williams said: “Today we have published the full detail behind our proposal for universal service reform. The proposal is based on detailed modelling and customer testing and does not require legislation.
“The lack of universal service reform by government and Ofcom over the past four years has held back Royal Mail’s transformation and urgent action is needed. Reform is in the regulator’s hands and we urge Ofcom to accelerate their review.”
IDS will post its annual results on 23 May.
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