International Distribution Services (IDS), which owns Royal Mail, has confirmed it will sell the postal operator to Czech billionaire Daniel Křetínský’s EP UK Bidco Ltd (Bidco) for a share value of 370p. Bidco is a newly formed company owned indirectly by Křetínský’s EP Corporate Group and J&T Capital Partners.
The sale price values Royal Mail’s ordinary share capital at £3.56bn (US$4.5bn) and implies a total enterprise value of £5.28bn (US$6.7bn), something which IDS chair Keith Williams called “fair and reasonable”.
He added, “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.
“The IDS board believes that the offer from EP is fair and reasonable given that there are uncertainties ahead and allows investors to realize value at a significant premium.”
Bidco’s offer includes commitments to retain the Royal Mail name and brand.
Enormous responsibility
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’s employees, union representatives and all other stakeholders.
“The EP group is a patient, supportive investor with a long-term view and decades of experience in owning critical national infrastructure. We are committed investors in the UK and first became a shareholder in IDS four years ago, as we saw the potential for the business to become one of the largest postal logistics groups in Europe.
“But IDS’s market is evolving quickly, and it must accelerate its transformation and investments into modernization to keep up with the competition. We will support the business in the next critical phase of its transformation and beyond, providing our experience and financial resilience to support the management team.
“We look forward to working closely with all of IDS’s stakeholders to deliver against its full potential.”
According to IDS, the acquisition is due to be complete in the first quarter of 2025.