After the Czech billionaire who is bidding for the ownership of Royal Mail for £3.6bn suggested that he might implement an “incentive program” if successful, the union representing postal employees has demanded they be given a stake in Royal Mail.
Daniel Kretinsky’s EP Group published a document Wednesday detailing its bid to acquire Royal Mail’s parent company International Distributions Services.
The company also sent a letter to 100,000 shareholders who included current and former employees and collectively owned more than 5% in the company, asking them to dispose of their shares. This would help pave way for the takeover.
The sale of IDS moved closer last month after the board accepted an offer from EP UK Bidco, a newly-formed venture between EP Group, and its long-standing partner J&T Capital Partners.
In the offer document issued on Wednesday, EP UK Bidco stated that it would “explore, after the completion of the acquisition and possibly offering a type of employee participation in the business”. The company said that a “profit-sharing mechanism” was being considered for its employees, but did not commit to any specific scheme.
The statement added that, “no decisions have been made regarding the terms or timing of implementation of such incentive scheme”.
A spokesperson for the Communication Workers Union (which represents postal workers) said that: “We are looking for a stake in the company, but also for a voice in its running.”
“We don’t want profit payouts at the mercy a board. We want workers’ input at all levels.” Not only the main board but also the remuneration and recruitment committees to ensure that we do not recruit people who have the interests of postal workers in mind.
EP’s offer includes a number contractual and undertaking commitments, such as maintaining first-class delivery six days a weeks and keeping the UK headquarters for at least five years.
Kretinsky made his fortune through energy and has a minor stake in the main Russian gas pipelines into Europe. He also supports , a Royal Mail plan that would reduce deliveries of second class post to every alternate weekday.
In the proposed deal, the billionaire will pay 360p per share for the 73% he doesn’t already own of the struggling Postal Service. Investors would also receive 10p as dividends on each share.
Kretinsky – nicknamed “Czech Sphinx”, for his unwillingness to speak in public – must now convince three quarters of shareholders to support the deal. Royal Mail was privatised for £3.3bn in 2013, and thousands of postal employees received shares. However, the majority of shares remain in the hands of large investors such as BlackRock UBS Schroders.
IDS shares dropped to 314p Wednesday, a sign the City wasn’t convinced that the bid will succeed.
The next government can “call in”, or request, that the takeover be scrutinized and prevented if the move is deemed to threaten the UK’s national interests. Labour, however, has not objected to the takeover as a principle. It says it is pleased with the assurances made by Kretinsky, and will ensure that he keeps them if the polls indicate it wins the election next week.
The EP offer may be worth as much as £3m for Royal Mail’s former and current directors. Postal staff who have held onto the shares that they received during privatisation in 2013 could receive a windfall of nearly £3,400.
The document also detailed EP’s relationship with J&T Partners – a Czech private investing firm that is ultimately controlled by private equity groups.
In an investigation this month asked questions regarding a series controversial global real estate deals that were connected to Kretinsky’s long-time business partners including J&T’s founder Patrik Patrik Tkac. The deal will see EP owning just under 44% of IDS, and J&T holding just over 56%.
The bidders stated in the offer that J&T had been a business partner for a long time of EP, its founder, and controlling shareholder Daniel Kretinsky.
“J&T, in line with other investments that both EP and J&T participated in, is in the role of a financial investment; it does not have a co-management or joint control over Bidco.”
If the takeover is successful, bankers and advisers from City institutions such as Barclays Goldman Sachs, and JP Morgan could share in up to £146m.
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