Royal Mail seeks to fast-track delivery shake-up after shock takeover bid

royal mail deliveries

Royal Mail is pressuring regulators to approve plans for less frequent letter deliveries, as the company scrambles to fend off a £3.1bn takeover bid from a Czech billionaire.

International Distributions Services (IDS), Royal Mail’s parent company, said foot-dragging by Ofcom had “held back” plans to modernise the company.

Keith Williams, chairman of IDS, said: “Reform is in the regulator’s hands and we urge Ofcom to accelerate their review.”

The pressure for the regulator to move quicker comes after Royal Mail last week rejected a shock takeover approach by Daniel Kretinsky, known as the “Czech sphinx”.

In a statement last week, Mr Kretinsky’s EP Group, which made the approach, specifically highlighted Royal Mail’s “slow transformation” as a factor putting the business under “unsustainable pressure”. The company said private investment would help to turn around the company.

Mr Kretinsky, who also holds stakes in Sainsbury’s and West Ham Football Club, is expected to table a new offer for IDS ahead of a May 15 deadline set under City takeover rules.

Ofcom is currently consulting on the future of the so-called universal service obligation (USO) that requires Royal Mail to deliver letters six days a week.

Royal Mail has set out proposals to deliver second class post just three times a week in a move bosses said could save the company £300m a year.

In a statement on Monday, IDS said: “These changes should be enacted quickly by Ofcom through changes to postal regulations and conditions and do not require legislation.”

In its submission, published in full on Monday, Royal Mail outlined plans to deliver second class letters and bulk business mail on every other weekday, while first class post would continue to be delivered six days a week.

Royal Mail also called for its quality of service targets to be relaxed.

Bosses have argued that the reforms would bring the UK in line with other European countries and help make Royal Mail’s loss-making letters business financially sustainable.

Mr Williams said: “The lack of universal service reform by Government and Ofcom over the past four years has held back Royal Mail’s transformation and urgent action is needed.”

The regulator is scheduled to publish an update on its consultation in the summer.

An Ofcom spokesman said: “There are a number of options for reforming the universal postal service. Some would require government and parliament to change primary legislation, while others could be made through changes to Ofcom regulations.

“We believe it’s important there’s a national debate, so everyone can have their say before we make any recommendations or proposals to secure its long-term future. Under any scenario, Royal Mail must modernise its network, become more efficient and improve its service levels.”

It is unclear what position Mr Kretinsky would take on USO reform should he take control of Royal Mail, though sources close to the tycoon insisted he did not plan to break up the postal service.

Royal Mail bosses will meet with investors this week as the company prepares to mount a defence against a fresh swoop.

Mr Williams said he would “make clear why the possible offer from EP Group significantly undervalues IDS and is highly opportunistic”.

Royal Mail has argued that it is making progress in its turnaround efforts as the group looks to focus on its more lucrative parcels business.

The swoop by the Czech sphinx, who is the largest shareholder in IDS with a stake of 27.5pc, is likely to spark scrutiny from ministers amid concerns that critical national infrastructure could end up in the hands of a foreign buyer.

Mr Kretinsky was previously subjected to a national security review in 2022 when he increased his stake in IDS to above 25pc. The change was ultimately approved.

Over the weekend, Royal Mail’s third largest shareholder said it supported the board’s decision to reject Mr Kretinsky’s bid.

Redwheel, which holds a stake of roughly 6.7pc, also called for “urgent reform” to postal regulations, warning that Royal Mail was vulnerable to “corporate predators”.

EP Group has said it “recognises that Royal Mail is an important national asset”, adding that it would be “prepared to support this iconic business as it transforms and rebuilds into a modern postal operator”.

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