NEW DELHI: The owner of the struggling Royal Mail in Britain, International Distribution Services (IDS), has accepted a takeover proposal from Czech billionaire Daniel Kretinsky‘s conglomerate, EP Group. The offer, valued at £3.6 billion ($4.6 billion), was deemed “fair and reasonable” by IDS chairman Keith Williams. EP Group already holds a 27.6 percent stake in IDS, and the takeover is subject to shareholder and regulatory approvals.
Royal Mail, a former state monopoly privatised in 2013, has seen its core letters business suffer as consumers increasingly communicate online. However, this shift has benefited its international parcels business, GLS.
Britain’s communications regulator, Ofcom, has proposed reducing Royal Mail’s delivery frequency to five or even three days per week, potentially saving the company hundreds of millions of pounds. IDS has long advocated for a reform of the universal service obligation (USO), which requires Royal Mail to deliver letters six days a week to all 32 million addresses in the UK for the price of a stamp.
EP Group sees IDS as “a strong business with solid foundations and the potential to become one of the leading postal logistics groups in Europe”, subject to modernisation that includes USO reform.
Kretinsky expressed his group’s “utmost respect for Royal Mail’s history and tradition”, acknowledging the responsibility that comes with owning a business with more than 500 years of history. The accepted offer was priced at 370 pence per IDS share, and following the announcement, IDS stock rose 2.9 percent to 330.5 pence in early London trading.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted that GLS has long been considered the “jewel in the company’s crown”, enjoying a level of success that Royal Mail has struggled to achieve, and EP Group will have been eyeing the long-term opportunities in this area. EP has committed to honouring IDS management’s promise not to impose compulsory redundancies at Royal Mail until April next year.
Dave Ward, general secretary of the Communication Workers Union, plans to meet with EP next week to call for further commitments on the company’s future. IDS employs approximately 153,000 staff, with the vast majority representing Royal Mail.
Royal Mail, a former state monopoly privatised in 2013, has seen its core letters business suffer as consumers increasingly communicate online. However, this shift has benefited its international parcels business, GLS.
Britain’s communications regulator, Ofcom, has proposed reducing Royal Mail’s delivery frequency to five or even three days per week, potentially saving the company hundreds of millions of pounds. IDS has long advocated for a reform of the universal service obligation (USO), which requires Royal Mail to deliver letters six days a week to all 32 million addresses in the UK for the price of a stamp.
EP Group sees IDS as “a strong business with solid foundations and the potential to become one of the leading postal logistics groups in Europe”, subject to modernisation that includes USO reform.
Kretinsky expressed his group’s “utmost respect for Royal Mail’s history and tradition”, acknowledging the responsibility that comes with owning a business with more than 500 years of history. The accepted offer was priced at 370 pence per IDS share, and following the announcement, IDS stock rose 2.9 percent to 330.5 pence in early London trading.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted that GLS has long been considered the “jewel in the company’s crown”, enjoying a level of success that Royal Mail has struggled to achieve, and EP Group will have been eyeing the long-term opportunities in this area. EP has committed to honouring IDS management’s promise not to impose compulsory redundancies at Royal Mail until April next year.
Dave Ward, general secretary of the Communication Workers Union, plans to meet with EP next week to call for further commitments on the company’s future. IDS employs approximately 153,000 staff, with the vast majority representing Royal Mail.