UK Government has approved the sale of Royal Mail’s parent company, International Distribution Services (IDS), to Czech billionaire Daniel Kretinsky’s EP Group for £3.6 billion.
Gatekeepers News reports that the acquisition received the green light following the establishment of “legally binding” commitments from Kretinsky.
As part of the agreement, the UK government will retain a “golden share,” enabling it to approve any significant changes related to Royal Mail’s ownership, headquarters location, and tax residency. Also, Kretinsky’s group must uphold the Universal Service Obligation (USO), which mandates six-day-a-week letter deliveries (Monday to Saturday) and parcel deliveries (Monday to Friday).
Kretinsky has assured that he will honour the USO “for as long as I am alive,” although the USO is currently under review, with suggestions to reduce second-class deliveries to every other weekday, potentially saving the company £300 million annually.
Further commitments to union representatives include providing workers with a 10% share of any dividends distributed to shareholders and establishing a worker group to meet monthly with Royal Mail’s directors, enhancing employee input in the company’s operations.
In his pursuit of securing the deal, Kretinsky has made several guarantees, including:
– Preserving the pension surplus.
– Maintaining Royal Mail’s brand name, headquarters, and tax residency in the UK for the next five years.
– Honoring union requests to avoid compulsory redundancies until 2025.
Kretinsky’s portfolio also includes a 27% stake in West Ham United football club and a 10% stake in Sainsbury’s, alongside investments in European energy, notably a gas transmission service that manages reduced Russian gas supplies to Europe with the EU’s consent.
The transaction was reviewed under national security laws due to Royal Mail’s classification as vital national infrastructure. Business Secretary Jonathan Reynolds labeled Kretinsky a “legitimate business figure,” noting that previous concerns regarding his links to Russia had been considered when he became the largest shareholder in Royal Mail nearly two years ago.
While unions have reached a preliminary agreement with Kretinsky’s EP Group concerning these additional commitments, they must finalize this through their internal democratic process.
Royal Mail has faced operational challenges in recent years, resulting in significant financial losses and customer complaints about delayed deliveries, including important medical and legal documents. Ofcom, the regulator, recently imposed a £10.5 million fine on the company for failing to meet first and second-class mail delivery targets, which was said to be “eroding public trust” in this long-standing institution.
Despite these difficulties, IDS reported a small profit last year, driven entirely by its logistics and parcels operations in Germany and Canada, which helped offset losses at Royal Mail. Kretinsky also expressed his intent to heavily invest in delivery lockers to enhance online delivery efficiency, mirroring successful implementations in Europe.
Daniel Kretinsky began his career as a lawyer in Brno before transitioning to investment success in the Central and Eastern European energy sectors. His business ventures have expanded to include a 10% stake in Sainsbury’s and a significant share in West Ham United, contributing to his estimated worth of £6 billion.
