Will the Czech Sphinx launch a bid for Royal Mail?

Royal Mail’s biggest shareholder has raised his stake in the delivery group even as analysts warned of mounting losses amid a bitter dispute with staff.

Daniel Kretinsky, a Czech billionaire who owns football club Sparta Prague and a stake in West Ham United, increased his holding in Royal Mail parent International Distributions Services (IDS) to 24 per cent from 23 per cent.

The purchase will fuel speculation that Kretinsky, nicknamed the Czech Sphinx due to his inscrutable demeanour, is considering a buyout of the group, which has floundered as Royal Mail is racked by strikes that cost it £200million last year.

Under City rules, an investor must make a takeover offer for a company if their stake reaches or exceeds 30 per cent.

But a swoop by Kretinsky is likely to trigger intense political backlash and spark opposition from trade unions amid fears over jobs and conditions. 

The company is in negotiations with the Communication Workers Union (CWU), which represents around 115,000 postal workers, in a bid to end the dispute, which is focused on pay and changes to working practices it insists are necessary to compete with rivals.

But there is little sign of a breakthrough after CWU bosses announced they could call more strikes if an agreement is not reached this week. 

JP Morgan analysts predicted the group would need to ‘materially reduce’ its cost savings targets to achieve a deal, and predicted Royal Mail would lose £224million next year, £100million more than previous forecasts.

IDS shares dropped 4.4 per cent, or 10.2p, to 220.2p. 

Its problems have weighed heavily on its stock price, which over the last 12 months has sunk by nearly 40 per cent, offering a prime opportunity for investors such as Kretinsky to increase their stake.