The sale of Royal Mail to Czech billionaire Daniel Kretinsky’s EP Group is reportedly close to being finalized. Sources suggest the deal could be confirmed within the next two weeks, marking a significant shift in the ownership of this historic institution.
Daniel Kretinsky has made several guarantees to smooth the path for this acquisition. These commitments are designed to address concerns from stakeholders, unions, and the government, ensuring a smooth transition. Some of the major concessions include:
- Maintaining Universal Service: The “one price goes anywhere” principle will remain intact.
- Pension Protection: Assurance has been provided that the pension surplus will not be raided.
- Preserving the Brand: Royal Mail’s name, headquarters, and tax residency will stay in the UK for at least five years.
- Job Security: No compulsory redundancies are to take place until 2025, with ongoing negotiations to potentially extend this agreement.
- Union Collaboration: Talks with the Communication Workers Union (CWU) have been constructive, indicating positive steps toward mutual understanding.
These guarantees have reportedly been sufficient to satisfy government concerns, paving the way for the deal to proceed under the National Security and Insurance Act.
The UK government has evaluated Kretinsky as a suitable owner for Royal Mail. Business Secretary Jonathan Reynolds referred to him as a legitimate business figure whose background has already been reviewed during his previous increase in stakeholding.
The Communication Workers Union, representing many Royal Mail employees, has also engaged in discussions with Kretinsky’s advisors. According to a CWU spokesperson, the meetings have been “honest and constructive” and are expected to continue in the coming days.
Royal Mail has faced numerous challenges in recent years. As the company is legally bound to deliver a “universal service,” it must provide six-day-per-week letter delivery and parcel delivery five days per week. However, operational issues and declining performance have put this obligation under strain.
Royal Mail has reported significant financial losses in recent years, contrasting with profits generated by its parent company International Distribution Services’ (IDS) other businesses in Germany and Canada. This disparity highlights the ongoing difficulties in maintaining profitability within the UK division.
The number of letters sent within the UK has halved compared to 2011 levels, a trend driven by the rise of digital communication. This decline has severely impacted Royal Mail’s revenue.
On the other hand, parcel deliveries have become more profitable due to the surge in online shopping. However, this growth has not been enough to offset the company’s overall financial struggles.
Royal Mail has suggested changes to its universal service obligation, including reducing second-class letter deliveries to every other weekday. These adjustments could save up to £300 million annually and provide the business with a better chance of financial stability. Kretinsky has publicly stated his support for such reforms, emphasizing his commitment to honoring the universal service obligation while addressing the company’s financial challenges.
As the final steps of the acquisition process unfold, additional safeguards may be introduced to solidify the commitments made by Kretinsky. These measures aim to reassure shareholders, employees, and the public that the future of Royal Mail is in capable hands.
The proposed £3.6 billion offer has already been recommended to shareholders by the board of International Distribution Services, and it is expected to gain sufficient support for the deal to proceed. If finalized, this acquisition could mark the beginning of a new era for Royal Mail, with the potential for modernization and a renewed focus on meeting customer needs.
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