Czech billionaire ‘very serious’ about bid for Royal Mail

The Czech billionaire circling Royal Mail is “very serious” about a takeover, a source close to negotiations has said, as the postal service prepares to mount a defence.

Daniel Kretinsky, the investor known as the “Czech sphinx”, is expected to table an improved offer for Royal Mail’s parent company International Distribution Services (IDS) after his initial £3.1bn bid was rebuffed.

The board of IDS is understood to be bracing for a fresh approach and preparing a defence.

A source said Mr Kretinsky’s initial approach to the 500-year-old postal service had been interpreted as an effort to drum up interest from other shareholders.

He is expected to make a fresh swoop before a deadline of May 15 imposed under City takeover rules.

Royal Mail will meet investors next week to discuss the approach, which it has branded “opportunistic”.

One shareholder described Mr Kretinsky’s 320-per-share bid as “insulting”, telling the Financial Times: “The offer is an absolute joke and I suspect he knows that.”

Another major shareholder said it had prepared a document outlining its views, but was told by Royal Mail not to go public until after the meeting.

Red Wheel, one of IDS’s largest investors, has previously signalled it would back a takeover bid and said the group’s parcel business GLS alone was worth 350p per share.

Royal Mail is working with Goldman Sachs’s Mark Sorrell, son of advertising tycoon Sir Martin Sorrell, alongside bankers at Barclays and Bank of America to prepare its defence.

Bosses are understood to be keen to emphasise that the postal service is at an inflection point as it pushes through a turnaround plan for its struggling letters business.

Insiders pointed to the company’s strongest Christmas performance in four years, as well as an ongoing review by Ofcom into its regulatory requirement to deliver letters six days a week. Royal Mail’s performance would likely improve if the watchdog agrees on money saving changes.

One source said Martin Seidenberg, IDS’s chief executive, was “reasonably calm” about the company’s prospects in the face of the shock takeover bid.

Mr Kretinsky is already the largest shareholder in IDS with a holding of 27.5pc through his company EP Group. But his efforts to take full control of the business are likely to prove controversial given Royal Mail’s critical role in British life.

The tycoon, who is also an investor in Sainsbury’s and West Ham Football Club, was previously subjected to a national security investigation when he increased his stake above 25pc in 2022, though this was ultimately approved.

Sir Vince Cable, who oversaw the privatisation of Royal Mail in 2013, has called on ministers to carry out a fit and proper person test on Mr Kretinsky.

In a statement this week, EP Group said it “recognises that Royal Mail is an important national asset”, adding that it would be “prepared to support this iconic business as it transforms and rebuilds into a modern postal operator”.

Any swoop on Royal Mail is also likely to face opposition from the posties union, which has called for the company to be renationalised.

Dave Ward, general secretary of the Communication Workers Union (CWU), said: “The vulnerability of Royal Mail Group to this type of bid is a clear demonstration of how privatisation has failed.”

Royal Mail declined to comment.