Royal Mail plc said Friday, May 15, that its CEO Rico Back had stepped down with immediate effect, in a surprise move.
The company, which gave no reason for the departure, said Keith Williams becomes interim executive chair of Royal Mail Group and Stuart Simpson becomes interim CEO.
Back had been at the helm for less than two years, according to relationship mapping service BoardEx, a sister company of The Deal.
Williams has been chairman of Royal Mail since May 2019. He’s been on the board since January 2018, according to BoardEx. Williams is also the chairman of retailer Halfords Group plc and the deputy chairman of John Lewis Partnership plc.
Back’s time as CEO has been plagued by weak financial performance and deteriorating industrial relations with the Communications Workers Union.
He has also struggled to implement plans to modernize the 500-year-old organization.
The company said on Friday that UKPIL revenue is down £22 million ($26.34 million) year on year. Letter revenue is down 23% but parcel revenue increased 20% from March 30 to May 3.
It added that it will provide a further update along with full-year results on June 25 after engaging with key stakeholders on a package of potential measures for the U.K. business, including measures to mitigate the impact of Covid-19, minimize losses and “ensure a sustainable long-term business.”
Back’s departure comes as a new investor has entered the company’s roster, Czech billionaire Daniel Kretinsky.
In a series of regulatory filings on May 1 it was revealed that Kretínsky’s Vesa Equity Investment held a 5.35% stake in the mail provider, which was established in 1516 by King Henry VIII. A regulatory filing on May 12 showed that Vesa had increased its stake in Royal Mail to 6.01%.
Deutsche Bank AG analyst Andy Chu in a May 5 note said there is a potential for a bid as Kretinsky lifts his stake.
“We have no insight into his investment strategy but these investments suggest that Mr. Kretinsky has a deep value strategy and this could explain his investment in the Royal Mail,” Deutsche Bank said in the note. “We have no idea as to the strategy of Vesa Equity Investment for RMG going forward and whether they view RMG as just a financial investment or as an acquisition target.”
Chu added that nothing “would technically block a potential deal (such as a golden share) other than shareholder approval.”