Deutsche Bank analysts have upgraded Royal Mail owner International Distributions Services PLC (LSE:IDS) after news broke on Wednesday of a potential takeover.
IDS was bumped up from a ‘sell’ to ‘hold’ and Deutsche also lifted the delivery firm’s share price target from 160p to 268p.
West Ham co-owner Daniel Křetínský’s bid to buy embattled IDS emerged on Wednesday, with the Czech energy tycoon already holding 27.5% of the company.
Though this initial offer, made earlier this month, was rejected, Křetínský’s EP Group was said to be readying further bids.
“With the increasing competition from multinational companies in the UK postal market, private investment in Royal Mail becomes crucial,” the group said.
Royal Mail has struggled in recent years, in particular with obligations to deliver letters across the UK six days a week.
Vince Cable, who oversaw Royal Mail’s privatisation in 2013, argued on Thursday that Daniel Křetínský should face tests before being allowed to buy the service.
“Britain has, more than any other major G7 country, been open to the takeover of utilities,” he said.
“I think the public mood has probably gone too far, which is why I suggest that applying the screening test is something that should be done.”
Deutsche added Křetínský now had until May 12 under UK takeover rules to announce a firm intention to bid on IDS.
IDS shares slipped 2.5% to 269.20p, after having soared on Wednesday.