Royal Mail: Analysts bet Kretinsky £3.5bn takeover is blocked despite board OK
The owner of Royal Mail has this morning accepted a bumper offer from Daniel Kretinsky’s EP Group, which could see the historic UK firm transferred to private foreign ownership.
The board gave the thumps up to the £3.5bn offer from the ‘Czech Sphinx,’ in a statement to markets this morning.
The deal values the business at just north of £5.2bn. Kretinsky’s affiliate vehicles already own more than 25 per cent off the firm.
Kretinsky’s offer comes with ‘safeguards’ on job losses, UK tax residency and a host of other areas, but the bid will be scrutinised by regulators over the coming months.
Shareholders will receive 360p per share as well as a special dividend if and when the offer becomes unconditional, bringing it to a total value of 370p.
That price represents a 72 per cent premium on where the stock was before Kretinsky made his interest public.
Shares have been trading below Kretinsky’s initial offer value in recent weeks as investors worried whether the deal would get regulatory sign-off.
That has continued today with shares still trading way below the offer price, suggesting the City does not view the takeover as nailed on.
Liberum analyst Gerald Khoo wrote this morning: “We still see government clearance under the National Security & Investment Act as a major hurdle.
“Our expectation is that an appropriate review of the proposed takeover could be lengthy. Even if that were not to be the case, any decision would fall foul of the pre-election prohibition on making long-term decisions that would tie the hands of the next government,” he said.
“Our base case remains that the deal gets blocked by the government.”
“Enormous responsibility” for Royal Mail
Kretinsky said this morning EP Group was a “patient, supportive investor” but that it was time for “transformation” of IDS to make it one of Europe’s leading logistics companies.
“IDS, and Royal Mail in particular, form part of the national infrastructure of the countries they operate in. More than that, Royal Mail is part of the fabric of UK society and has been for hundreds of years. 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.”
“The scale of the commitments we are offering to the company and the UK Government reflect how seriously we take this responsibility, to the benefit of IDS’ employees, union representatives and all other stakeholders.”
“IDS has the potential to become a leading international logistics player. Both the IDS Board and EP are acutely aware of their responsibilities to IDS and particularly to the unique heritage of Royal Mail and its obligations as the designated Universal Service Provider of postal services in the UK.
Kenneth Williams, IDS Chair
Labour shadow business secretary Jonny Reynolds earlier this month outlined a raft of areas in which the party – which is expected to take power after the coming election – would need to see commitments from Kretinsky, most of which are believed to have been met.