Czech tycoon Kretinsky’s £4.5bn bid for owner of Royal Mail rejected

Czech tycoon Kretinsky’s £4.5bn bid for owner of Royal Mail rejected
Daniel Kretinsky has been on a seemingly endless shopping spree across Europe in the past two years, taking stakes in companies he believes are undervalued. / bne IntelliNews
By Albin Sybera April 18, 2024

Czech energy and media tycoon Daniel Kretinsky has had his £4.5bn takeover bid for the owner of Royal Mail rejected.

International Distributions Services (IDS) shares jumped by 29% on April 17 after it announced it had turned down an indicative offer at 320p per share from Kretinsky’s EP Group, the Financial Times reported.

IDS stated that “the timing of the proposal is opportunistic” and that it “significantly undervalues IDS and its future prospects”.

EP now has until 15 May to announce whether it will make a binding offer for IDS; if not, it has to walk away.

Through his investment company VESA Equity Investment, Kretinsky already controls 27.5% of IDS, which is the owner of the British postal service Royal Mail, and the Netherlands-based parcel business GLS.

Kretinsky and his long-term business partner, Patrik Tkac, hold stakes in significant assets in both the UK and the Netherlands, including football side West Ham, supermarket chain J Sainsbury, and Dutch PostNL.

EP Group is advised by JPMorgan Chase, Citigroup, and BNP Paribas, FT noted, quoting sources close to the situation. 

“Kretinsky will have to talk hard numbers and cast-iron financial commitments if he intends to continue a pursuit that would require a thumbs up from the government,” Nils Pratley commented in the Guardian on the turned down offer, noting Kretinsky’s contradictory statements, which appeared to rule out a bid for Royal Mail a year ago.

Pratley also noted that EP Group’s offer did not provide a hint of the future course of Royal Mail investments, including crucial questions the national parcel services face, such as whether the loss-making Royal Mail would be kept together with profitable GLS.

“As it happens, Kretinsky addressed the split idea a year ago – he argued it didn’t make sense – but, as we’ve seen, his thinking can move on,” Pratley wrote.

The FT's famous Lex column commented: "Daniel Křetínský’s reputation for mystery suggests he is difficult to understand. The Czech billionaire’s investment approach seems pretty straightforward: target very well-known, very underperforming companies."

It said IDS's value would be enhanced by spinning off GLS and negotiating with the UK government to have Royal Mail's service obligations lessened. "North of 400p a share might be needed to merit the board’s attention," it opined.

Boosted by the energy crisis, Kretinsky and Tkac have been on a seemingly endless shopping spree across Europe in the past two years, but their companies faced some disappointments in recent months.

This February, French IT company Atos ended talks with Kretinsky’s EPEI over a purchase of Atos unit Tech Foundations, which was already announced last August as completed. FT reported that Atos’ new management sought to re-negotiate the terms, while several minority shareholders and some French legislators criticised the selling of the strategic company to a foreign investor.

Kretinsky’s EPH energy infrastructure unit, EPIF, recently reported a 15% y/y drop in profits in 2023 as a result of deceased flow of Russian gas to Europe.

On the other side, Czech media have reported that EPH is looking forward to CZK44bn (€1.74bn) in payments from the German government for scaling down its coal activities in Germany. EPH is also poised to receive similar payments from the Slovak government.