Post by radellaf on May 29, 2024 18:09:39 GMT
The owner of the U.K.’s Royal Mail — with roots dating back more than five centuries — has agreed to be bought by a Czech billionaire for almost $5 billion, a move that would end British ownership of the postal service that invented the adhesive stamp.
International Distribution Services accepted an offer of 3.57 billion pounds, or about $4.56 billion, from Czech billionaire Daniel Kretinsky’s EP Group. The bid improved an earlier offer made in April, which IDS rejected.
The Royal Mail has a storied history but has suffered in recent years like most one-time postal monopolies around the world. Letter volumes have dropped since the dawn and widespread adoption of email. Competition from new delivery services has also heated up.
The British government privatized the service about a decade ago. It listed on the London Stock Exchange and later changed its name to IDS. Last year, Royal Mail reported an adjusted operating loss of 348 million pounds, following a 419 million pound loss the previous year.
The service traces its roots back to 1516 when it was created by Henry VII to deliver mail between his royal court, a service that carried on for the next 119 years. Charles I opened the service to the general public in 1635. It took on the name Royal Mail in 1784 and launched the world’s first adhesive postage stamp, called the Penny Black, in 1840.
The launch of the stamp led to a surge in mail volumes, which rose from 67 million in 1839 to 242 million by 1844, and more than 1 billion a year by 1875.
Letter volumes peaked at 20 billion a year in the 2004-5 fiscal year, according to Royal Mail’s website. It was 7 billion in the 2022-3 period. In five years time, Royal Mail expects volumes to drop to 4 billion, though it expects parcel volumes to grow.
Under the deal, the IDS board and EP have agreed to a number of promises to the U.K. government in recognition of Royal Mail’s status as a key part of the national infrastructure. EP has agreed to retain for five years Royal Mail’s “universal service” — a one-price-goes-anywhere in the U.K. promise — and a six-day-max delivery commitment for first-class letters.
The two sides also agreed that there won’t be any change in control of Royal Mail or GLS, a Netherlands-based delivery business also owned by IDS, for three years upon completion of the deal. Royal Mail will remain headquartered in, and a tax resident of, the U.K. EP has also agreed to protect employees rights and continue to recognize the existing unions.
“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,” Kretinsky said.
Under the proposal, accepting shareholders would get 370 pence for each share held, a 73% premium to IDS’ closing share price of 214.20 pence on April 12, the day before EP’s previous offer proposal was made public.
International Distribution Services accepted an offer of 3.57 billion pounds, or about $4.56 billion, from Czech billionaire Daniel Kretinsky’s EP Group. The bid improved an earlier offer made in April, which IDS rejected.
The Royal Mail has a storied history but has suffered in recent years like most one-time postal monopolies around the world. Letter volumes have dropped since the dawn and widespread adoption of email. Competition from new delivery services has also heated up.
The British government privatized the service about a decade ago. It listed on the London Stock Exchange and later changed its name to IDS. Last year, Royal Mail reported an adjusted operating loss of 348 million pounds, following a 419 million pound loss the previous year.
The service traces its roots back to 1516 when it was created by Henry VII to deliver mail between his royal court, a service that carried on for the next 119 years. Charles I opened the service to the general public in 1635. It took on the name Royal Mail in 1784 and launched the world’s first adhesive postage stamp, called the Penny Black, in 1840.
The launch of the stamp led to a surge in mail volumes, which rose from 67 million in 1839 to 242 million by 1844, and more than 1 billion a year by 1875.
Letter volumes peaked at 20 billion a year in the 2004-5 fiscal year, according to Royal Mail’s website. It was 7 billion in the 2022-3 period. In five years time, Royal Mail expects volumes to drop to 4 billion, though it expects parcel volumes to grow.
Under the deal, the IDS board and EP have agreed to a number of promises to the U.K. government in recognition of Royal Mail’s status as a key part of the national infrastructure. EP has agreed to retain for five years Royal Mail’s “universal service” — a one-price-goes-anywhere in the U.K. promise — and a six-day-max delivery commitment for first-class letters.
The two sides also agreed that there won’t be any change in control of Royal Mail or GLS, a Netherlands-based delivery business also owned by IDS, for three years upon completion of the deal. Royal Mail will remain headquartered in, and a tax resident of, the U.K. EP has also agreed to protect employees rights and continue to recognize the existing unions.
“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,” Kretinsky said.
Under the proposal, accepting shareholders would get 370 pence for each share held, a 73% premium to IDS’ closing share price of 214.20 pence on April 12, the day before EP’s previous offer proposal was made public.