Royal Mail takeover by Czech billionaire Daniel Kretinsky approved
The government has given the green light for the sale of Royal Mail to Czech billionaire Daniel Kretinsky.
Mr. Kretinsky's company, EP Group, is set to acquire the parent company of the postal service, known as International Distribution Services (IDS).
The £5.3 billion agreement was reached in May, but it had to go through a government review due to national security regulations because Royal Mail is seen as an essential part of the country's infrastructure.
The Competition and Markets Authority (CMA) might choose to look into the acquisition.
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Royal Mail's main office, tax obligations, and corporate framework will stay British for the next five years due to a "legally binding" deal made with the government.
The commitment to ensure letter delivery to every location in the UK six days a week, at a consistent rate, will continue without a specified end.
The government will keep a special share that gives it the authority to approve significant decisions.
As part of the agreement, employees will be entitled to 10% of any dividends that Mr. Kretinsky receives. Additionally, a committee made up of workers will be established to meet with company directors on a monthly basis.
The proposal needs to be approved and confirmed by the union, so it won't be revealed on Monday.
Dave Ward, the leader of the Communications Workers Union (CWU), has expressed support for it.
"This deal establishes the groundwork for revitalizing Royal Mail," he stated.
"The negotiations have been tough, but we've reached an agreement that is truly historic. This deal prioritizes both postal workers and customers, placing them at the center of all Royal Mail's activities."
This follows the Royal Mail's submission of proposed changes to Ofcom as part of their efforts to improve operations, which may involve reducing the number of deliveries.
Daniel Kretinsky's connections to Russia are likely to face increased examination.
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Royal Mail Group is set to be transferred to foreign ownership, although the government will retain a "golden share" in the company. This approach is typical for the government when dealing with companies it considers vital for national security, such as BAE Systems and Rolls-Royce, which are both involved in defense manufacturing.
For Royal Mail, its significance lies in its contribution to the country's communication systems, which are crucial for national connectivity.
Even with protective measures in place, the agreement will lead to increased examination of the EP group's private Czech proprietor.
Daniel Kretinsky has demonstrated a strong interest in acquiring UK investments, holding a 10% share in Sainsbury's as well as 27% of West Ham Football Club.
The earnings come from the profits generated by his extensive energy investments.
This encompasses a gas transportation company known as EUStream, which transmits Russian gas to Europe.
The company is authorized by the EU and does not purchase or engage in the trade of Russian gas.
The UK government seems to be pleased with Mr. Kretinsky's connections to Russia, but these ties are expected to receive more examination in the future.
At Royal Mail, he recognizes both a challenge and a chance to revitalize and update an organization that has fallen short of its goals and faced penalties from regulatory bodies.
Who is Daniel Kretinsky?
Mr. Kretinsky, who is 49 years old, is positioned 33rd on The Sunday Times Rich List, with a net worth estimated at £6 billion—an increase of £2 billion since 2023.
In 2021, he acquired a 27% share in West Ham United for £150 million. His EP Group also had a 27.5% interest in IDS, the company that oversees Royal Mail.
He owns almost 10% of the shares in Sainsbury's.
Business Secretary Jonathan Reynolds expressed his gratitude to Mr. Kretinsky and the EP group for their positive attitude and collaborative efforts.
He mentioned that it has created significant benefits for both customers and the UK.
"For far too long, efforts to ensure a stable future for Royal Mail have come to a standstill," he continued.
In order for the deal to be completed, shareholders of IDS must come to a decision about selling their shares.
The acquisition will be finalized once EP Group holds 75% of IDS, which is anticipated to occur within the first quarter of 2025.
