West Ham part-owner Daniel Křetínský in shock bid for Royal Mail parent International Distribution Services

Royal Mail has put forward proposals that would see first class mail kept as a six-day a week service, but second class letter deliveries cut dramatically (Gareth Fuller/PA) (PA Wire)

A Czech energy and media billionaire who is a major shareholder in West Ham is in talks about a possible takeover of the Royal Mail

Shares in the Royal Mail’s owner, the International Distributions Services, (IDS) rocketed 18% valuing it at £2.4 billion after Daniel Křetínský, known as the Czech Sphinx, confirmed the approach.

The former investment bank lawyer’s holding company EP Group said in a shock statement that it has “submitted a non-binding indicative proposal to the Board of IDS seeking its recommendation for a possible cash offer.”

IDS said the offer “significantly undervalues IDS and its future prospects”.

it said: “The Board believes the timing of the proposal is opportunistic. It does not reflect the growth potential and prospects of the Company under a new management team, a significant modernisation programme underway at Royal Mail, and the ongoing review by Ofcom in relation to the Future of the Universal Service Obligation.”

Although the proposal was initially rejected by the board of IDS, talks are continuing. Through Vesa Equity investment he is already the biggest shareholder in IDS with 27.5%. As well as Royal Mail, EP also owns a Dutch parcels business called GLS.

The approach comes at a time of huge challenges for Royal Mail, a business that can trace its roots back more than 500 years but is seeing its core letters business in rapid decline. The Government recently consulted on plans to cut the number of delivery days.

Any takeover of Royal Mail, which was privatised between 2013 and 2015, particularly by a foreign buyer, would be hugely controversial.

In a statement EP Group said it “recognises that Royal Mail is in a challenging situation. Weak financial performance, poor service delivery and a slow transformation, in the face of a market going through structural change, have put the business under unsustainable pressure. With the increasing competition from multinational companies in the UK postal market, private investment in Royal Mail becomes crucial.

“EP Group also recognises that Royal Mail is an important national asset that would benefit from being able to take a longer-term view and is prepared to support this iconic business as it transforms and rebuilds into a modern postal operator delivering high-quality service to its customers, stability to its workforce and sustainable financial performance.”