Royal Mail owner IDS receives £3.57Bn cash offer from EP UK Bidco - CILT(UK)
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LATEST NEWS

Royal Mail owner IDS receives £3.57Bn cash offer from EP UK Bidco

29 May 2024/Categories: Industry News, Freight Forwarding, Logistics & Supply Chain, Operations Management


Parent Company to Royal Mail, the International Distribution Services (IDS) has today submitted paperwork regarding a cash offer to take over the company.

An offer of £3.57 Billion has been proposed by newly formed enterprise EP UK Bidco Limited.

EP UK Bidco Limited is owned by EP Corporate Group and J&T Capital Partners with the offer being made by Czech billionaire Daniel Křetínský.

IDS shareholders will receive a total value of £3.70 pence per share with the final dividend of 2 pence per IDS share in respect of the financial year ending March 31, 2024. A ‘special dividend’ of 8 pence per IDS share will be conditional upon the acquisition becoming unconditional.

Keith Williams, Chair of IDS, said: "IDS has the potential to become a leading international logistics player.

“Both the IDS Board and EP are acutely aware of their responsibilities to IDS and particularly to the unique heritage of Royal Mail and its obligations as the designated Universal Service Provider of postal services in the UK.

“The IDS Board has negotiated a far-reaching package of legally binding undertakings and commitments which provide our customers, employees and broader stakeholders with important safeguards. 

“These cover the provision of the one-price-goes-anywhere Universal Service Obligation (including First Class letters still delivered six days a week), the financial stability and maintenance of the IDS Group including Royal Mail, the maintenance of employee benefits and pensions, and ensuring Royal Mail remains headquartered and tax resident in the UK.”

Earlier this Month The Office of Communications, Ofcom, opened an investigation into Royal Mail’s failure to meet delivery targets and they have been under scrutiny following the publication of their full year quality report service.

On May 24 Royal mail said the business delivered 92.4% of second-class mail within three working days, 74.5% of first-class mail within one day and more than 91% within two days.

The mail delivery service failed to meet Ofcom’s targets of delivering 93% of first-class mail within one working day of collection and 98.5% of second-class mail within three working days of collection.

Ofcom fined royal mail £5.6 million in 2023 for also failing to meet first and second-class delivery targets.  

“In deciding whether the company is in breach of its obligations, we will consider if there were any exceptional events – beyond the company’s control – that may have explained why it missed its targets,” said Ofcom.

General Secretary from the Communications Workers Union (CWU), Dave Ward has expressed his opinion on Royal Mail’s takeover developments and said: “this situation is a direct result of a failed and ideological privatisation over a decade ago mixed with the blatant mismanagement of the company in recent years.”

“These events have ripened one of the most iconic and important companies in the UK for a takeover by foreign investors. We do welcome some of the commitments that have been made but the reality is postal workers across the UK have lost all faith in the senior management of Royal Mail and the service has been deliberately run down.

“We will meet with EP Group next week and call for a complete re-set in employee and industrial relations, the restoration of postal services and further commitments on the future of the company.

CWU also mentioned they will be engaging with the Labour Party and other stakeholders to call for another model of ownership for Royal Mail.

 An ownership “where our members and customers have a direct say in key decisions and the creation of a golden share which will protect a key part of the UK’s communications infrastructure,” Dave added.

Royal Mail had recently been in disagreement with CWU over pay and working condition but reached an agreement in Apil last year.

Royal Mail’s financial year results ending March 31, recorded an operating profit of £26 million and revenues of £12.68 million.

Expressing his comments on the acquisition, Daniel Křetínský, founder and chairman of EP, 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.

“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.”

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