Royal Mail’s owner has said it would be “minded” to agree a takeover by shareholder Daniel Kretinsky after the Czech billionaire put forward a higher proposed bid worth around £3.5 billion.

International Distribution Services (IDS) said Mr Kretinsky’s EP Group had upped its proposal to 370p a share, from an initial 320p-a-share approach made on April 9, to buy the shares in IDS that it does not already own.

IDS said Mr Kretinsky, whose EP Group owns a 27.5% stake in the firm, had agreed to offer a set of “contractual undertakings” to protect key public interest factors recognising Royal Mail’s status as a major part of national infrastructure under the proposal.

This would include commitments to Royal Mail’s plans to keep six-day-a-week first class letter deliveries under the universal service, protect workers’ rights and keep the Royal Mail brand, as well as its UK headquarters and tax residence.

EP Group would also continue the one-price-goes-anywhere service for letter post inside the UK, it said.

IDS said it was minded to agree to a deal on the terms and price in the proposal, should a firm bid be made.

Mr Kretinsky now has until 5pm on May 29 to make a firm offer after the City Takeover Panel agreed to extend the so-called “put up or shut up” deadline, which was originally set for5pm on Wednesday May 15.

Keith Williams, chairman of IDS, said the proposed offer is “fair” and reflects the value of both Royal Mail and its international parcels network, General Logistics Systems (GLS), based in Amsterdam.

He said: “The board is minded to recommend this offer price, which it considers to be fair and reflects the value of GLS’ current growth plans and the progress being made on change at Royal Mail to adapt the business to a significant fall in the demand for letters and growth in parcels.

“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.”

Shares in IDS surged another 18% in Wednesday mid-afternoon trading, having already soared higher after the firm revealed last month it had rejected an initial approach from Mr Kretinsky.

Mr Kretinsky, who is said to be known as the “Czech Sphinx”, already has a raft of investments, including stakes in London football club West Ham United and supermarket giant Sainsbury’s.

But any deal to buy IDS would face intense political and public scrutiny, given the importance of Royal Mail and the postal service.

Chancellor Jeremy Hunt has reportedly voiced concerns over the proposed takeover, recently saying there were “lessons” to be learned from the ownership of troubled Thames Water.

The Communication Workers Union (CWU) warned that the “future of postal services in the UK is again under threat”.

CWU general secretary Dave Ward said: “EP Group must immediately demonstrate an up-front and open commitment to working with the union to completely change the culture in workplaces across the UK, rule out any break-up of the company or raid of the pension surplus.”

Labour’s shadow business secretary Jonathan Reynolds has written to Mr Kretinsky calling for safeguards to be put in place to protect Royal Mail and ensure it is not operated overseas.

Mr Reynolds wrote: “Royal Mail is as British as it gets, and Labour will take the necessary steps to safeguard its undeniable identity and place in public life.”

Mr Kretinsky’s investment in IDS has long been a source of controversy, coming under government scrutiny in 2022 amid national security worries after he built up his shareholding.

In the end, the then business secretary, Kwasi Kwarteng, did not intervene following a review of the stake.

The bid interest comes at a crucial time for Royal Mail, which put forward plans to Ofcom earlier this month to scrap second-class letter deliveries on Saturdays and cut the service to every other week day as part of overhaul efforts.

In its submission to Ofcom’s consultation on the future of the universal postal service, Royal Mail said it would keep a six-day-a-week service for first-class mail in a climbdown on previous calls for all Saturday letter deliveries to be scrapped.