Royal Mail owner IDS accepts £3.5bn bid from West Ham co-owner Křetínský

Royal Mail is heading for foreign ownership for the first time in its 508-year history after its parent company accepted a £3.5 billion takeover bid, but questions remain over its status as the UK’s universal postal service provider beyond 2029.

International Distributions Services, which owns Royal Mail as well as a Dutch deliveries business, today revealed that it had accepted a 370p-per-share bid from Czech energy and media tycoon, and West Ham part-owner, Daniel Křetínský, via his EP Group business. The acquisition will take Royal Mail’s parent company off  the London stock market 11 years after it was privatised.

Křetínský said: “IDS, and Royal Mail in particular, form part of the national infrastructure of the countries they operate in. More than that, Royal Mail is part of the fabric of UK society and has been for hundreds of years. 

“The EP group has the utmost respect for Royal Mail’s history and tradition, and I know that owning this business will come with enormous responsibility – not just to the employees but to the citizens who rely on its services every day.”

Because of the “critical functions” performed by Royal Mail, EP Group has agreed on certain undertakings with the UK Government, including that the business will remain the country’s Universal Service Provider for five years after the deal closes. It’s possible that after that date it would no longer fill that role and instead perform more like purely commercial delivery businesses, though this would still require an act of Parliament to declare a new Universal Service Provider..

Over the next five years, Royal Mail will continue to deliver everywhere in the country for both its first and second-class services, and offer first-class post six days a week. That would give it room to cut second-class deliveries to less than six days a week.

IDS had previously suggested a two or three-days-a-week second class service, alongside six days a week of first-class deliveries. Even that is more frequent than some of Ofcom’s proposals, which included cutting the number of delivery days to just three even for first-class post. The softer obligations came after Royal Mail comfortably missed its requirements to deliver 93% of first-class post on time.

Křetínský said: “The scale of the commitments we are offering to the company and the UK Government reflect how seriously we take this responsibility, to the benefit of IDS’ employees, union representatives and all other stakeholders.”

But Greeting Card Association chief executive Amanda Fergusson said: “Our members are rightly concerned that the undertakings being proposed by EP Group in relation to its takeover of Royal Mail are inadequate and short-lived.

“Undertakings that expire after a single five-year parliamentary term will not inspire confidence from small businesses and consumers that the service is being protected for the long-term.

“Five- year commitments to support an institution with over 500 years of history appears to fall short.”

IDS shares gained 11p today to 332p. That’s still 10% below the offer price, suggesting a significant amount of uncertainty about the deal closing.

Křetínský, nicknamed the “Czech Sphinx” for his enigmatic approach to business, made most of his £6.9 billion fortune in the energy sector, owning Prague–based conglomerate EPH. He also built a media empire that includes the Czech News Center and tabloid Blesk in his home country. as well as the French edition of Elle. Křetínský previously held a 49% stake in French newspaper Le Monde, before selling it last year. He has been the chairman of 37-time Czech champions Sparta Prague since 2004, and bought a stake in West Ham in 2021.