The Government has granted approval for the takeover of Royal Mail by Czech billionaire Daniel Kretinsky, making it the first time the postal service will come under foreign ownership. The acquisition of International Distribution Services (IDS) by Kretinsky’s EP Group is set to be formally announced this Monday morning after undergoing scrutiny under the National Security and Investment Act. The deal between the two parties was agreed upon in May, with the finalization contingent on Government approval due to Royal Mail’s significance in the UK.
As part of the acquisition, Daniel Kretinsky has made key commitments, including maintaining the Royal Mail trademark, preserving both the company’s headquarters and tax residency in the UK for at least five years, and upholding the company’s universal service obligations. Kretinsky, often referred to as the ‘Czech sphinx’, reportedly offered additional concessions to secure approval, such as promising workers a 10% share of any dividends he receives.
To ensure continued national influence, the Government is expected to retain a “golden share” in Royal Mail, allowing it the authority to approve major decisions concerning ownership, headquarters relocation, and tax residency changes. Kretinsky has also pledged not to touch the pension surplus and agreed to refrain from implementing any forced redundancies until 2025. Nevertheless, unions are advocating for further assurances and seeking an extension of the commitment to avoid compulsory layoffs.
Royal Mail recently incurred a £10.5 million fine from regulatory body Ofcom for failing to meet postal delivery targets during the 2023-2024 fiscal year. Ofcom highlighted that less than three-quarters of first class post and 92.7% of second class post arrived on time, falling short of the targeted delivery rates. This penalty marks the second within two years, following a £5.6 million fine issued to Royal Mail in November 2023.
In an interview with BBC Breakfast, Ofcom’s chief executive, Dame Melanie Dawes, emphasized the importance of Royal Mail delivering for its customers, highlighting the necessity for significant changes to adapt to the evolving postal landscape. She underscored that it is now the responsibility of the company under its new ownership to enhance its services and meet the public’s expectations.
In summary, the approval of the Royal Mail takeover by Daniel Kretinsky represents a significant milestone in the company’s history, as it transitions to foreign ownership for the first time. The commitments made by Kretinsky, coupled with regulatory oversight, aim to safeguard the interests of Royal Mail employees and maintain the quality of postal services for customers across the UK.