The owner of Britain’s Royal Mail has agreed to a £3.57 billion ($4.55 billion) takeover by Czech billionaire Daniel Kretinsky, announced on Wednesday.
This deal will privatize one of the world’s oldest postal firms.
International Distributions Services (IDS.L), owner of Royal Mail and international parcels network GLS, was valued at 370 pence per share in the offer.
Shares rose 3.5% to 332 pence in morning trading, indicating possible uncertainty about the deal, which faces intense government scrutiny during an election year, with a vote set for July 4.
Royal Mail, known for its iconic red post boxes, has faced labour strikes, competition, and market share losses in recent years, causing its stock to plummet more than 45% from a May 2018 high of 607.7 pence.
It was privatised in 2013 with an initial public offering price of 330 pence per share.
IDS has secured a package that includes maintaining the ‘one-price-goes-anywhere’ postal service six days a week, preserving employee benefits and pensions, and keeping Royal Mail headquartered and tax resident in the UK.
Royal Mail’s labour unions will remain recognized for at least five years post-deal, according to Kretinsky’s EP Group.
Jonathan Reynolds, the Labour Party’s business spokesman, emphasized the party’s commitment to these assurances if they win the election.
“The scale of the commitments we are offering to the company and the UK Government reflect how seriously we take this responsibility,” Kretinsky stated.
He owns stakes in Sainsburys and West Ham United Football Club, and holds a 27.6% stake in IDS, making him the largest shareholder.
Kretinsky argues that private investment in Royal Mail is essential due to its poor service delivery, slow transformation, and rising competition.
Finance Minister Jeremy Hunt has stated that any Royal Mail takeover bid would undergo “normal” national security scrutiny but would not be opposed in principle.
AJ Bell analyst Dan Coatsworth highlighted the uncertainty about which political party will decide the outcome.
In 2022, Britain did not intervene when Kretinsky increased his stake in IDS to over 25%.
The CWU, Royal Mail’s largest union, plans to meet with EP next week to reset industrial relations, restore postal services, and discuss Royal Mail’s future.
The union also intends to engage with the Labour Party and other stakeholders to propose a new ownership model for Royal Mail.
Royal Mail, employing over 130,000 people across the UK, has been transitioning to a parcel-focused business as letter volumes decline.
EP Group raised its bid to 370 pence per share earlier this month after a previous 320 pence bid was rejected in April.