‘Sell’ stock in Royal Mail owner, says bank; takeover likely to be blocked By Proactive Investors

Proactive Investors – Liberum has issued a ‘sell’ recommendation for International Distributions Services PLC, the parent company of Royal Mail (LON:), citing significant challenges to a potential takeover, with a target price set at 180p.

The analysis highlights considerable obstacles, chiefly the UK’s National Security and Investment Act, which could impede the transaction due to political risks, particularly in an election year.

The catalyst for Liberum’s call is the interest from billionaire Daniel Kretinsky, known as the ‘Czech Sphinx,’ who has recently had a £3.2 billion bid for IDS rejected.

Kretinsky, who also co-owns West Ham United and holds a stake in Sainsbury’s, is reportedly preparing a new offer. His acquisition would mark the first time the 508-year-old postal service, established by Henry VIII in 1516, would fall into foreign hands.

This potential takeover is poised to ignite fierce resistance from various quarters including unions, the public, and lawmakers, given the historical and cultural significance of Royal Mail in the UK.

Liberum remains sceptical about the deal’s success, emphasising the political complications that could derail even a revised offer that might satisfy the IDS board.

The stock was down 5.3% in morning trade at 261.4p.

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