Redwheel calls for regulator to scale back Royal Mail delivery requirements
By Iain Gilbert
Date: Monday 22 Apr 2024
(Sharecast News) - Royal Mail owner International Distributions Services' third-largest shareholder said the company was "vulnerable to corporate predators" as a result of obligations requiring it to deliver letters six days a week.
Redwheel implored regulators to scale back requirements under its universal service obligations following a failed £3.1bn takeover bid by West Ham co-owner Daniel Křetínský.
"Letter volumes have declined from 20 billion at their peak in 2004-5 to seven billion in the last financial year and are likely to continue to fall," said Redwheel's Ian Lance. "The universal service obligation means Royal Mail must maintain a high fixed-cost network without the revenue to sustain it."
Lance stated that this left the delivery service both undervalued and "vulnerable" to takeovers.
Křetínský's EP Group seemingly indicated that further offers will be made following his "opportunistic" bid, with a deadline of 15 May being set under UK takeover rules.
"We would urge that change to the universal service obligation needs to be meaningful, provide long-term relief from the material and unreasonable cost burden and be implemented rapidly," Lance added.
S of 1250 BST, IDS shares were up 1.84% at 277.20p.
Reporting by Iain Gilbert at Sharecast.com
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