Czech billionaire asks Royal Mail shareholders to back his bid

Royal Mail bidder Daniel Kretinsky today launched the process of persuading shareholders of parent company International Distributions Services (LSE:IDS) to back his £3.6 billion takeover.

The full terms and timetable of his investment group’s 370p a share offer for the Royal Mail parent company have been posted and published online as a formal document.

• Invest with ii: What is a Managed ISA? | Open a Managed ISA | Transfer an ISA

His offer is subject to regulatory approvals and the acceptances of 75% of all the shares in issue, which includes the 27.6% already held by Kretinsky’s investment vehicle.

The document states that the latest time and date by which the offer can be accepted initially is 25 August, which represents day 60 in the takeover process. However, shareholders who hold shares through a nominee account have a deadline three days earlier.

It adds that if regulatory clearance has not been satisfied at 5pm on 2 August, the bidding party will request that the Takeover Panel suspend the timetable until this is satisfied.

Only when the conditions are met will the 360p a share cash consideration and 8p special dividend be paid to shareholders. A 2p a share final dividend linked to annual results is due to be distributed on 30 September, subject to approval at the IDS AGM on 25 September.

• Takeover action: Royal Mail, Anglo American and Bloomsbury
• Royal Mail’s 10 years since IPO: what has it delivered?
• Sign up to our free newsletter for share, fund and trust ideas, and the latest news and analysis

A microsite directing shareholders to answers to commonly asked questions went live at noon today. Announcements on acceptance levels are expected on 17 July and every seventh day after.

IDS shares today traded at 315p, with the gap to the offer price suggesting that City continues to see the risk of the deal being blocked by the next government.

The price represents a premium of 72.7% to the closing price of 214p the day before April’s disclosure of Kretinsky’s takeover interest. Shares launched at 330p when the Government sold 60% of its shareholding in the heavily oversubscribed IPO of October 2013.

Retail investors got an initial allocation of 227 shares equivalent to £749.10 at the offer price, while 613 shares were handed to each eligible postal worker worth £2,000 each. At the time this amounted to about £490 million for more than 150,000 employees, representing a 10% stake in the company.

Kretinsky’s EP Group confirmed in today’s document that it is looking at potentially offering a form of employee participation model in the business following the acquisition.

• Trading Strategies: a favourable risk/reward opportunity here
• Election manifestos 2024: the impact on your personal finances
• Annuities versus gilts for retirement income – which is best?

Royal Mail’s origins date back nearly 508 years to the time of Henry VIII and the business remains the UK’s designated Universal Service Provider for 32 million UK addresses.

Its recent progress has been hit by restructuring and industrial disputes, although today’s document reports “positive momentum” has continued in the new financial year. This includes a 7.1 percentage point year-on-year improvement in first-class quality of service to 82.1% in May.

The other part of the IDS business is the more profitable GLS division, which has one of the largest ground-based parcel delivery networks in Europe. Royal Mail made a loss of £254 million in 2023/24 compared with a profit of £280 million at GLS.