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Home HRCommunication Shares in Royal Mail owner surge after takeover interest

Shares in Royal Mail owner surge after takeover interest

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Susannah Streeter
  • IDS group shares jump by more than 17% after the bid by EP Corporate Group.
  • The board has knocked back the proposal but remains open to further discussions.
  • EP Corporate Group is owned by Daniel Křetínský, known as the Czech Sphinx.

Susannah Streeter, head of money and markets, Hargreaves Lansdown:

‘This offer has come as a surprise given how downbeat sentiment has been towards IDS in recent years, as strikes, struggles with letter declines and a spluttering transformation have taken their toll. Fortunes had been looking up in recent months, helping keep the recovery rolling forward, but question marks surrounding the future of the UK universal postal service appear to have weighed on the share price.

The group’s international arm, GLS, has long been considered the jewel in the company’s crown, enjoying a level of success which Royal Mail has found so elusive. Margin growth has come under pressure in this part of the business of late, partly due to the insidious effects of inflation. However, GLS has still been growing revenue and its highly likely that EP Corporate Group sees plenty of long-term opportunities here. Royal Mail is GLS’s awkward younger brother, which has to tail along on any new adventure. IDS can’t just ditch the UK postal business due to guarantees made to the government when the group was privatised.

This bid comes just after Emma Gilthorpe has taken up her new job at the boss of Royal Mail, and the company detailed proposals to scale back second-class letter deliveries in an attempt to cut costs and limit losses. Any reforms still appear to be in the distance, but EP Corporate Group is clearly encouraged by the noises coming from the regulator and is eyeing up considerable possibilities the international postal arm presents. Although shares have dipped back slightly from their immediate climb, they remain sharply higher on the day, an indication that investors expect discussions to be continuing.”

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