Royal Mail takeover to run regulatory gauntlet as board’s backs the bid

The takeover bid for Royal Mail parent International Distribution Services (LSE:IDS) looks set to run the political and regulatory gauntlet in the UK, as the postal company’s board has now backed the offer from Daniel Křetínský.

Křetínský, bidding via an ‘EP Group ‘ vehicle, proposes to pay 370p per IDS share which pitches the transaction at a premium of around 73% to the prevailing share price immediately before the initial approach in mid-April.

The announcement from the IDS board, that it had recommended the EP Group bid, comes on the final day deadline under the UK takeover code.

As the deal now progresses it is expected that the deal will go through a phase of regulator diligence, further complicated by the British general election due to take place on 4 July 2024.

Chief among the concerns for regulators and politicians will be the protections for the universal mail provision, a legacy of Royal Mai’s heritage as the national postal service which mandates a number of delivery standards and operational KPIs which, if missed, result in fines from the government.

Additionally, UK Chancellor of the Exchequer Jeremy Hunt has recently warned that the government would also review any transaction from a national security standpoint.

Křetínský, today, commented: “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."