(Alliance News) - International Distributions Services PLC, the owner of Royal Mail, on Wednesday confirmed it had rejected an "opportunistic" offer from EP Corporate Group AS.
IDS said it received a preliminary and conditional non-binding proposal from EP Corporate last Tuesday regarding a possible cash offer at 320 pence per share. A bid at this level would value IDS at around GBP3.06 billion.
Shares in IDS closed up 21% at 259.40 pence in London on Wednesday. Its current market value is around GBP2.49 billion.
However, the IDS board concluded the plan "significantly undervalues IDS and its future prospects," and rejected the approach last Thursday.
"The Board believes the timing of the proposal is opportunistic. It does not reflect the growth potential and prospects of the company under a new management team, a significant modernisation programme underway at Royal Mail, and the ongoing review by Ofcom in relation to the Future of the Universal Service Obligation," IDS said in a statement.
Earlier Wednesday, EP Corporate Group AS said International Distributions Services PLC, the owner of Royal Mail, had rejected a bid proposal.
EP Corporate, is a 100% direct shareholder of VESA Equity which holds an around 27.6% stake in IDS.
It is controlled by Czech billionaire Daniel Kretinsky, a lawyer-turned-energy tycoon known as the "Czech Sphinx".
His other investments include stakes in UK supermarket chain J Sainsbury PLC, French newspaper Le Monde and London football club West Ham United.
EP Corporate said it had submitted a non-binding indicative proposal to IDS seeking its recommendation for a possible cash offer for the shares it does not already own.
Although this was rejected, EP Corporate said it looked forward to continuing to engage constructively with IDS and would consider "all options."
EP Corporate said it viewed the UK as an attractive and dynamic market for investment.
It recognises that Royal Mail is in a "challenging situation."
"Weak financial performance, poor service delivery and a slow transformation, in the face of a market going through structural change, have put the business under unsustainable pressure. With the increasing competition from multinational companies in the UK postal market, private investment in Royal Mail becomes crucial," it added.
EP Corporate described Royal Mail as an important "national asset" that would benefit from being able to take a longer-term view. It pledged to support "this iconic business" as it transforms and rebuilds into a modern postal operator.
IDS comprises two businesses, including international parcels network General Logistics Systems BV, based in Amsterdam, and the Royal Mail business in the UK.
Its postal business remains regulated. In March, Royal Mail proposed a change to its UK letter delivery offering, as it grapples with weaker volumes, in a move which could see "fewer than 1,000 voluntary redundancies".
The measures could trim the net cost of the UK postal universal service operation by GBP300 million per year.
"This is very dependent on how quickly reform is enacted and the rate of letter decline. These savings would allow Royal Mail to continue to invest in the modernisation and transformation of the business to provide products and services that customers want and reduce its environmental impact," IDS said.
IDS Chief Executive Officer Martin Seidenberg said: "If we want to save the Universal Service, we have to change the universal service. Reform gives us a fighting chance and will help us on the path to sustainability."
EP Group has until May 15 to make a bid or walk way under UK takeover rules.
By Jeremy Cutler, Alliance News reporter
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