The owner of Royal Mail received a takeover offer from a Czech billionaire who has stakes in Sainsbury’s and West Ham United football club.
Daniel Křetínský approached International Distributions Services (IDS), the owner of the struggling British postal company, this month.
In a statement, Křetínský’s EP Group, said the proposal at an undisclosed price was rejected by IDS but it “looks forward to continuing to engage constructively with the board”.
Křetínský has built up a 27.5% stake in Royal Mail through his investment vehicle, Vesa. The tycoon, known as the “Czech Sphinx” for his inscrutable approach, has a string of business interests, from energy to media assets to football clubs.
EP Group said it “recognises that Royal Mail is in a challenging situation”. It added: “Weak financial performance, poor service delivery and a slow transformation, in the face of a market going through structural change, have put the business under unsustainable pressure. With the increasing competition from multinational companies in the UK postal market, private investment in Royal Mail becomes crucial.
“EP Group also recognises that Royal Mail is an important national asset that would benefit from being able to take a longer-term view and is prepared to support this iconic business as it transforms and rebuilds into a modern postal operator delivering high-quality service to its customers, stability to its workforce and sustainable financial performance.”
After the Financial Times reported Křetínský’s approach, shares in IDS rose by 20% on Wednesday to 257p, valuing the company at £2.47bn. Reuters said the tycoon had been working with advisers on studying a bid in recent months.
The IDS group comprises Royal Mail, which has a mandate to deliver nationwide in the UK at a fixed price six days a week, and General Logistics Group (GLS), an international parcels group based in Amsterdam.
EP has until 15 May to either announce a firm intention to make an offer for IDS or walk away.
A bid would come as Royal Mail faces a crossroads in its corporate future. The industry regulator, Ofcom, has opened the door to the postal firm scaling back its universal service obligations in the face of mounting losses.
Earlier this year, Ofcom laid out a series of options for the future of the postal service, including cutting it from six days a week to five or even three, with a more expensive option retained to allow for next-day deliveries.
Rishi Sunak said the government would oppose any reduction in the six-day-a-week service.
In response, Royal Mail has asked the industry regulator to let it reduce deliveries of second-class letters to just two or three days a week, cutting nearly 1,000 jobs and saving £300m a year in the process.
Any takeover bid would be studied by the government under national security laws. In 2022 the government told Royal Mail it would study an increase in Křetínský’s stake under the National Security and Investment Act. However, that investigation was called off later that year.
Labour has yet to make its position on the future of Royal Mail clear, although Kate Osborne, the Labour MP for Jarrow who worked at the company for 25 years, has said she would like to see it renationalised.
IDS has been contacted for comment.