Czech mogul Daniel Kretinsky explores bid for Royal Mail owner

London — Czech billionaire Daniel Kretinsky has been exploring a possible bid for the owner of the UK’s Royal Mail, which has seen its market value fall to £2.1bn over recent years, two people familiar with the matter said.

Kretinsky, the largest shareholder in Royal Mail’s London-listed parent International Distributions Services (IDS), has been working with advisers informally in recent months to consider taking over the company, one of the people said.

Deliberations are in the early stages, the person said, cautioning there is no certainty Kretinsky will decide to go ahead with an offer.

Kretinsky holds a 27% stake in IDS via investment vehicle Vesa Equity Investment that he founded in 2018 with business partner Patrik Tkac, which also has a stake in J Sainsbury and Foot Locker, according to Vesa’s website.

Vesa declined to comment.

The shares of IDS rose 24% after Reuters and the FT reported the potential bid.

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

Royal Mail has faced hurdles over the past couple of years with strikes by postal workers, a cybersecurity incident, a fine from regulator Ofcom for missed delivery targets as well as losing a 360-year monopoly to deliver parcels from post office branches.

Any bid by Kretinsky for one of the world’s oldest postal firms would follow a buying spree in Europe, including of indebted French supermarket group Casino in 2023, as well as attempts to buy half of Thyssenkrupp’s steel business and Atos’ loss-making IT services unit.

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

In May 2023, the Sunday Times reported that Kretinsky told the paper that he had no intention of bidding for Royal Mail and it was beneficial for the company to remain listed.

A deal could trigger an intervention from the British government under the terms of the National Security and Investment Act, which gives ministers a greater say over deals involving critical infrastructure.

In 2022, the department for business, energy and industrial strategy reviewed Vesa’s plans to increase its about 22% stake in the company at the time to more than 25%.

Shares in IDS have fallen by two-thirds from their most recent peak of 571p in June 2021 to open at 213p on Wednesday.

IDS said revenues grew 3.8% to £9.45bn for the nine months ending in 2023, according its quarterly update in January. It expects to make an operating profit in the second half of 2024 that would offset the £169m loss in the first half. 

Reuters