Royal Mail’s sale to Czech billionaire Daniel Kretinsky has been cleared by the UK Government, paving the way for the more than 500-year-old postal service to pass into foreign ownership for the first time.
Business Secretary Jonathan Reynolds confirmed the Government had secured a raft of legally binding commitments with Mr Kretinsky’s EP Group over the postal service, including protecting the one-price-goes-anywhere delivery commitment and a pledge to keep Royal Mail headquartered in the UK.
Mr Kretinsky and International Distribution Services agreed to a deal worth £3.6 billion – or £5.3bn including debt – in May but had been waiting for approval from the Government, which must sanction the takeover given the national importance of Royal Mail and the postal service in the UK.
Mr Kretinsky – nicknamed the Czech sphinx – has since made several further concessions to gain approval, including giving the Government a “golden share” in the postal service, meaning it will need to approve any key changes to Royal Mail’s ownership, headquarters location and tax residency.
Mr Reynolds said: “For too many years progress on securing a stable future at Royal Mail has stalled, but from day one we have been committed to providing a secure future for thousands of workers and customers.”
He added the agreements reached with EP Group showed “we are working towards ensuring a financially stable Royal Mail with protected links between communities other providers can’t reach”.
The deal comes five years after the Czech billionaire’s EP Group acquired the Kilroot and Ballylumford power stations in Co Antrim as part of a £163 million deal in June 2019.
Mr Kretinsky said they had worked to ensure “unprecedented commitments and undertakings that demonstrate the high regard EP Group has for Royal Mail as an institution, the service it provides to millions of UK homes and businesses, and Royal Mail employees”.
It sees the biggest hurdle overcome for the deal to go through, with the takeover now expected to complete early in 2025.
There were already a number of pledges made by Mr Kretinsky when the proposed deal was announced, including a vow to keep the brand name and retain Royal Mail’s HQ and tax residency in the UK for the next five years, as well as commitments to protect the company’s universal service obligations.
As part of the commitments, EP Group said it will also ensure that Royal Mail complies with regulatory conditions and that it will not undergo any changes to its corporate structure.
The group said that it had also reached an agreement to recognise and negotiate with the unions representing Royal Mail’s frontline staff and managers – the Communication Workers Union (CWE) and Unite respectively – for at least the next five years.
Keith Williams, chairman of IDS, said the agreement between EP Group and the Government “marks an important milestone in the approvals process”.
He said the commitments “provide our customers, colleagues, unions, regulators and broader stakeholders with safeguards for the provision of the Universal Service Obligation, the ongoing financial stability of Royal Mail, the maintenance of colleague benefits, and Royal Mail’s broader role in the UK”.
Under its service obligations, Royal Mail must deliver letters six days a week to all 32 million addresses in the UK for the price of a stamp – a requirement stipulated by law under the Postal Services Act 2011.
Regulator Ofcom has been reviewing the future of the universal service since January and is proposing plans to ditch Saturday deliveries for second-class letters while keeping first-class mail six days a week.
On Friday, Royal Mail was fined £10.5 million by Ofcom for missing its first and second-class postal delivery targets in 2023-24.
Ofcom chief executive Dame Melanie Dawes told BBC Breakfast on Monday there were “real questions about what the service needs to be, going into the future”.
She said: “We will be coming forward next year with proposals to make sure that it is sustainable, and absolutely we will hold Royal Mail to account in delivering – whatever that final outcome is.
“Ultimately though it is up to the company, under their new ownership, to deliver now.”
