Proactive Investors - Royal Mail (LON:IDSI) owner, International Distributions Services PLC’s shares rose 5.6% after it reached an agreement with unions to end the long-running pay dispute.
In a joint statement, Royal Mail and the CWU said: "After almost a year of talks, Royal Mail and the Communication Workers' Union are pleased to announce they have reached a negotiators' agreement in principle.”
"The proposed agreement will now be considered by the executive of the union before being voted on by the union's membership.”
CWU general secretary Dave Ward and deputy general secretary Andy Furey said: "On the basis that the negotiators' agreement is endorsed by the postal executive, we will put in place a full communications plan to engage members.”
Analyst Gerald Khoo at Liberum said an agreement to end the dispute is likely to be well received.
However, he noted details of the deal on pay and restructuring have yet to be revealed and he expects Royal Mail to have made significant concessions.
“We see the execution risk as very high and continue to see an ongoing risk of value leakage from GLS into Royal Mail,” Khoo commented.
He pointed out Royal Mail management’s recent track record on implementing restructuring and delivering productivity improvements is poor, and that was before the year long dispute.
“It will take a long time for productive working relationships to be re-established between staff and managers at the local level,” he added.
Khoo reiterated a sell rating on IDS with an unchanged sum of the parts based target price of 135p.