LONDON (ShareCast) - (Sharecast News) - Shares in Royal Mail owner International Distributions Services (IDS) surged on Wednesday afternoon after its board recommended a revised offer from billionaire Daniel Křetínský's EP Group which values the company at £3.5bn.
IDS, which also owns the GLS Group which provides parcel services in Europe and North America, said it has now received a second takeover proposal from EP Group for the remaining 72.4% it doesn't already own, valued at 370p per share.

EP Group had previously offered 320p a share for IDS last month but the proposal was rejected the board.

The new offer represents a cash payout of 360p per share, a 2p final dividend in respect of the most recent financial year and a special dividend of 8p.

The stock was up 20% at 326p by 1438 BST.

IDS chair Keith Williams said the board is "minded to recommend this offer price", but the proposal does come with a number of key conditions.

"The board has sought, and EP Group has agreed to offer as part of the proposal, a set of contractual undertakings to protect key public interest factors and recognise Royal Mail's status as a key part of national infrastructure," the statement said.

These include retaining the Royal Mail brand name, keeping its headquarters in the UK, and maintaining a "one-price-goes-anywhere" service for the entire UK as well as the continuance of six-day delivery for first-class letters. EP Group also has to honour employees' current rights and recognise the existing unions of both Royal Mail and GLS.

"While these and other aspects of Royal Mail's status as a key part of national infrastructure are ultimately the government's responsibility to protect, the board feels a duty to raise these issues and seek to protect the public interest as well as the interests of employees before recommending a bid that would take IDS into private ownership," IDS said.

Williams said the offer is considered "fair" and reflects the business's current growth plans. "It is however regrettable that despite four years of asking, the government has not seen fit to engage in reform of the Universal Service and thus improve our financial position and ensure that Royal Mail could provide an economically sustainable service to the British public," he said.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE