Czech billionaire Daniel Křetínský says Royal Mail owner rejected takeover approach

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Royal Mail owner International Distributions Services has rejected a takeover approach by an investment group controlled by Czech billionaire Daniel Křetínský. 

Křetínský, a lawyer-turned-energy tycoon known as the “Czech Sphinx”, had built a 27.5 per cent stake in the company through his vehicle Vesa Equity Investment, making it the largest shareholder in the group.

In a statement on Wednesday, following a report by the Financial Times that Křetínský was preparing a bid, Vesa’s parent company EP Corporate Group said it had “submitted a non-binding indicative proposal” to IDS on April 9.

The Křetínský-controlled group said it had sought the IDS board’s backing for a possible cash offer, without disclosing the terms.

The proposal was rejected, said EP Corporate Group, but it added that it “looks forward to continuing to engage constructively with the [IDS] board as EP Group considers all its options”. 

Line chart showing shares in the Royal Mail owner jumped on news of the potential bid

IDS, comprised of Netherlands-based parcels business GLS and the UK’s Royal Mail, had a market capitalisation of £2.1bn before the news, which pushed the share price up 20 per cent before the gains were pared slightly.

EP said there was no certainty that it would make a binding offer for IDS. 

Royal Mail was privatised between 2013 and 2015 but has been grappling with the difficulties of maintaining its expensive delivery network in the face of a sharp decline in its traditional letter-delivery business.

The company delivered 20bn letters to 28mn addresses in the 2004-5 financial year, while this year it expects to deliver 7bn letters.

The postal business remains regulated. Royal Mail proposed last month that it should be allowed to deliver second-class letters only three times a week instead of six. The plans would reduce the burden of the universal service obligation, which forces the company to deliver items everywhere in the UK for the same price.

It has been trying to resolve the problems partly by capturing a larger part of the UK’s fast-growing parcels delivery business, in which it is the market leader. However, it faces fierce competition from rivals such as Amazon Logistics.

Křetínský’s other investments include stakes in UK supermarket chain J Sainsbury and London football club West Ham United.

IDS did not immediately respond to a request to comment.

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