Royal Mail takeover by Czech billionaire Daniel Křetínský approved

Posted by Admin December 16, 2024 Sports

The takeover will mark the first time that Royal Mail has been controlled from beyond the UK.Photograph: Guy Bell/Shutterstock

The sale of Royal Mail’s parent company to the Czech billionaire Daniel Křetínský has been approved by the UK government after a review under national security laws.

The £3.6bn takeover of International Distribution Services (IDS) – the owner of the 508-year-old Royal Mail – by Křetínský’s EP Group was confirmed on Monday morning.

It will be the first time Royal Mail has been controlled by an overseas owner in its history, which can be traced as far back as 1516 under Henry VIII.

The government will retain a “golden share” in IDS, which means any changes to Royal Mail’s ownership, tax residency or headquarters will need its assent. The Royal Mail brand will also be protected for as long as EP owns the company.

The board of IDS agreed to the takeover in May, after rejecting initial approaches at a lower price.

EP Group agreed to a series of undertakings to persuade the government to let the deal through. They include retaining the universal service obligation for a first-class postal service to anywhere in the country for a fixed price six days a week while Křetínský is in control – a stronger commitment than the previous five-year pledge.

The government has also blocked Royal Mail from making dividend or similar payments to its owners unless the company meets financial targets and has improved its postal delivery performance. Dividends and asset sales will also be blocked if they put the universal service at risk.

IDS has suggested second-class post could be reduced to every other weekday. Keith Williams, the non-executive chair of IDS, said the deal’s approval was an “important milestone”, but called for “urgent reform of the universal service and the continued transformation of this great British business”.

Dame Melanie Dawes, the chief executive of the regulator Ofcom, told BBC Breakfast on Monday that the company had “a lot of changes that they need to make” because of the decline in letter volumes and said the watchdog would make proposals for the future of the postal service next year.

Other undertakings include keeping the Royal Mail headquarters and tax residency in the UK for five years, and maintaining base salaries and benefits for staff for at least two years.

Křetínský said: “EP Group is a long-term and committed investor with a mission to make Royal Mail a successful modern postal operator.”

The business secretary, Jonathan Reynolds, said talks with EP and Křetínský had been “constructive”. “I look forward to working with them to fix the foundations and ensure Royal Mail continues to deliver for the communities and businesses who rely on it most,” he said.

The takeover was called in for a review in August on the grounds of national security because Royal Mail’s letter delivery still plays a crucial – albeit diminishing – role in the country’s communications infrastructure. The UK owns golden shares in companies that are regarded as crucial to its security, including the weapons manufacturers BAE Systems and Rolls-Royce.

Approval of the deal , which values IDS at £5.3bn including debt, will be seen as a triumph for a businessperson who – despite his reputation as the low-profile “Czech Sphinx” – has shown a clear interest in snapping up British assets. Alongside EP’s main business running coal, gas and power generation operations, Křetínský owns 27% of West Ham United football club and 10% of the Sainsbury’s supermarket chain.

The deal, which is expected to be completed in the first quarter of 2025, will probably prompt further scrutiny of Křetínský’s business dealings, particularly in Russia. EP Group holds a stake in a Slovakian gas pipeline that continues to pump Russian gas to Europe. The Guardian has reported that Křetínský held talks with Alexey Miller, the head of Russia’s state-owned gas company, Gazprom, and a close ally of Vladimir Putin.

EP Group is also part-owned by Patrik Tkáč. In June, the Guardian revealed that Tkáč’s J&T Banka is embroiled in a court case over a $6m (£4.7m) loan it provided to the former premier of the Turks and Caicos Islands, Michael Misick, who is facing a corruption prosecution. J&T denied any wrongdoing to the Guardian at the time.

EP Group said on Monday it had reached a deal with the Communication Workers Union (CWU) and Unite over the terms for workers and managers at Royal Mail.

Dave Ward, the CWU’s general secretary, said the union wants public ownership but that it had to be realistic and work with Křetínský. In a sign of the deep discord between workers and Royal Mail management, Ward said that the Czech offered a better prospect than the Royal Mail board, which he accused of “giving up”.

“The way forward is to get investment in the business, diversify revenue,” he said, adding that the government “cannot sit on the side going forward” because of its involvement in the negotiations.