Czech billionaire Daniel Kretinsky’s EP Group is on the verge of finalizing the purchase of Royal Mail, with the deal potentially being confirmed within the next two weeks. Kretinsky has made several concessions to secure the £3.6bn takeover, which has been recommended by the board of International Distribution Services (IDS), Royal Mail’s parent company.
The proposed acquisition comes with significant guarantees, including:
– Maintaining the “one price goes anywhere” universal service
– Preserving the Royal Mail brand name
– Keeping headquarters and tax residency in the UK for five years
– Committing to no compulsory redundancies until 2025
– Negotiating further job protection with the Communication Workers Union (CWU)
Business Secretary Jonathan Reynolds has referred to Kretinsky as a “legitimate business figure,” and previous concerns about his alleged links to Russia have been reviewed and dismissed. The CWU has described its meetings with EP Group as “honest and constructive.”
The deal is subject to approval under the National Security and Insurance Act, though officials have previously reviewed Kretinsky’s increased stake in the company. Additional safeguards may include extending the duration of the current guarantees.
Royal Mail has been facing significant challenges in recent years. The company is legally obligated to deliver letters six days a week and parcels five days a week, but its performance has deteriorated, leading to substantial financial losses. Customers have complained about delivery delays, and the volume of letters has dramatically decreased – currently at half the 2011 levels.
Parcel deliveries have become more popular and profitable, with IDS’s German and Canadian logistics businesses offsetting Royal Mail’s losses. The company is currently exploring potential reforms to its universal service obligation, suggesting to Ofcom that reducing second-class deliveries could save up to £300m annually.
Kretinsky has stated that he would honor the universal service obligation “as long as I am alive” while supporting proposed reforms to the current delivery model. The CWU remains cautiously optimistic, continuing negotiations with EP Group.
The potential sale represents a significant moment for Royal Mail, a historic organization that was privatized a decade ago. The takeover could bring substantial changes to the company’s operations, potentially addressing its financial challenges while maintaining its core service commitments.
Shareholders are expected to accept the offer, and the deal appears to be moving forward with support from both government officials and union representatives. The final approval and completion of the sale are anticipated in the coming weeks, marking a new chapter for Royal Mail under Kretinsky’s ownership.
