IDS, owner of Royal Mail, rejects the offer proposal of the group led by the Czech billionaire

It has been revealed that a group led by West Ham shareholder and Czech billionaire Daniel Křetínský submitted a proposed takeover bid for Royal Mail owner International Distributions Services earlier this month.

EP Group said IDS rejected its initial proposal, but added that it “looks forward to continuing to engage constructively with the Board as EP Group considers all of its options.”

In a statement on Wednesday, EP Group, controlled by Křetínský, said it had submitted a “non-binding indicative proposal” to IDS’s board of directors requesting its recommendation for a possible cash offer for the part of IDS not already owned by EP Group and its affiliates.

After the publication of the statement, IDS actions rose 18.11 per cent or 38.80p to 253.00p, giving the company a valuation of around £2.5bn.

The UK has seen an uptick in approaches to its London-listed companies, which have struggled with low valuations.

The EP Group said: ‘The EP Group recognizes that Royal Mail is in a difficult situation.

‘Weak financial performance, poor service delivery and slow transformation, in the face of a market undergoing structural change, have put the business under unsustainable pressure.

“With increasing competition from multinational companies in the UK postal market, private investment in Royal Mail becomes crucial.”

Křetínský, which through Vesa Equity Investment is the largest shareholder in IDS, the London-listed parent company of Royal Mail, has been working informally with advisers in recent months to consider taking over the business. A successful takeover bid would give Křetínský full control of IDS.

Křetínský owns a 27 percent stake in IDS through the investment vehicle Vesa Equity Investment, which he founded in 2018 with his partner Patrik Tkac. Vesa Equity also has stakes in J Sainsbury and Foot Locker.

IDS comprises two businesses, including international parcel network General Logistics Systems based in Amsterdam and the Royal Mail business in the UK.

Royal Mail has faced multiple problems in recent years, with postal worker strikes, a cybersecurity incident, a fine from regulator Ofcom for failing to meet delivery targets and the loss of a 360-year monopoly for delivering packages from postal branches, all of which has taken a toll.

Earlier this month, Royal Mail proposed a series of operational changes in a bid to save £300m a year.

Royal Mail wants to deliver all non-first and second class mail every two working days, amid regulator Ofcom’s call for universal service reform due to falling letter volumes.

Under the proposals, standard bulk commercial mail delivery for things like invoices or statements would be “aligned with Second Class”, so they would arrive in three business days instead of two.

Royal Mail said it wanted to maintain daily deliveries of first-class letters between Monday and Saturday under new reform proposals it has put forward.

The government previously opposed the reduction to a six-day service.

Package deliveries would remain unchanged and would continue to be delivered “up to seven days a week”, he said.