London (Parliament Politics Magazine) – The British government has accepted Czech billionaire Daniel Křetínský’s £3.6bn acquisition of Royal Mail’s parent company, making it the first time the historic postal service will be owned by a foreign investor.
The deal was approved by the government after scrutiny under national security review on Monday.
For the first time since its establishment in 1635, Royal Mail will now be managed by a foreign owner.
The UK government’s “golden share” in International Distribution Services (IDS) ensures that any changes to Royal Mail’s ownership, tax status, or headquarters require its approval, while the Royal Mail brand will be protected under EP’s control.
The takeover deal of £5.3bn was finalized in May but was reviewed under national security laws because of Royal Mail’s status as a vital national infrastructure, and the Competition and Markets Authority (CMA) possibly examining the takeover.
Under the “legally binding” deal with the government, Royal Mail’s headquarters, tax base, and corporate structure will remain in the UK for the next five years.
As part of the agreement, EP Group is required to maintain the Universal Service Obligation (USO), which includes six-day letter delivery and parcels from Monday to Friday.
The UK government has imposed restrictions on Royal Mail from paying dividends and asset sales, unless it meets financial and delivery improvements, with asset sales also blocked if they put the universal service in danger.
The non-executive chair of IDS, Keith Williams, called the approval a significant milestone, but urged for “urgent reform of the universal service and the continued transformation of this great British business”.
Jonathan Reynolds, Business Secretary, while announcing the agreement, stated the deal showed the government’s dedication to maintaining a financially stable Royal Mail while protecting links to hard-to-reach communities.
The acquisition of IDS, Royal Mail’s parent company, is ready to be finalized by early next year.
The deal also includes a commitment to unions, ensuring workers would receive a 10% share of any dividends paid to Mr Křetínský and the creation of a worker’s group for monthly meetings with Royal Mail’s directors.
The agreement’s approval marks a victory for Daniel Křetínský, the “Czech Sphinx,” who has expanded his portfolio with UK assets, including a stake in West Ham United and Sainsbury’s.
The deal expected to close by 2025, is likely to bring enhanced scrutiny of Křetínský’s business relations with Russia, especially his involvement in a Slovakian gas pipeline that continues to transport Russian gas into Europe.
BBC reported that Ofcom fined Royal Mail £10.5 million last week for missing delivery targets on first and second-class mail.
Dame Melanie Dawes, Ofcom’s chief executive, said it is up to the new owners to improve and the regulatory will “absolutely” ensure Royal Mail is held accountable.
She added, “real questions about what the service needs to be going into the future.”
Last year, IDS made a minor profit, with gains from its German and Canadian logistics and parcels business, which offset Royal Mail’s losses.
Mr Kretinsky told the broadcasters his plans to invest majorly in the expansion of delivery lockers to enhance online delivery efficiency, similar to practices in Europe.
Daniel Kretinsky, 49 years old, ranked 33rd on The Sunday Times Rich List as reported by Sky News, with a net worth of £6bn, up £2bn from 2023.
He acquired a 27% stake in West Ham United for £150m in 2021. while his EP Group already holds 27.5% of the Royal Rail parent company IDS.
Jonathan Reynolds, the UK’s Business Secretary, expressed gratitude to Mr Kretinsky and EP Group for their “constructive approach” to the agreement.
He added, “For too many years progress on securing a stable future at Royal Mail has stalled.”