Daniel Křetínský intensifies talks with Royal Mail owner about an improved bid

Czech billionaire Daniel Křetínský’s EP Group has intensified talks with the owner of the UK’s Royal Mail about an improved takeover bid, after his initial £4.5bn offer was rejected last month.

Discussions between EP and the board of International Distributions Services, owner of the former British postal monopoly, have deepened in the past couple of weeks, said people familiar with the matter.

It remains unclear if EP and IDS can strike a deal, the people cautioned. EP has until May 15 to make a firm offer for IDS under UK rules governing takeover bids for public companies.

Křetínský, a lawyer-turned-energy tycoon, is the largest shareholder in IDS, with a 27.5 per cent stake.

He has been a prominent dealmaker in the UK, making investments in supermarket chain J Sainsbury and London football club West Ham United.

EP said it had “submitted a non-binding indicative proposal” to IDS on April 9, after his interest in acquiring the business was first reported by the Financial Times.

However, IDS rejected the indicative offer of 320p a share, calling the timing of the bid “opportunistic” and saying it undervalued the business. Other IDS shareholders criticised the proposal.

IDS’s shares have been sliding over the past three years, and the stock last traded at the value of EP’s proposal in May 2022. The shares closed down almost 1 per cent at 280.2p on Friday.

Royal Mail faces challenges relating to the high cost of its comprehensive, UK-wide delivery service while it adjusts to a steep drop in the volume of letters it handles.

EP is contending with scrutiny from UK government officials and a heavily unionised IDS workforce.

The Communication Workers Union has said handing over ownership of “one of the UK’s most prestigious institutions” to a foreign equity investor “cannot be right”.

Křetínský had made clear his intention not to break up IDS by separating the lossmaking Royal Mail from the group’s profitable European logistics business GLS, or touch the group’s pension scheme surplus, some of the people briefed on the situation said.

Křetínský has also said he will maintain IDS’s investment-grade credit rating and will avoid compulsory redundancies.

Representatives for Křetínský and IDS declined to comment.