Who is Daniel Křetínský, the new boss of Royal Mail?

The UK government has approved the significant acquisition of Royal Mail's parent company by Czech billionaire Daniel Křetínský.

Here's everything you should understand about the entrepreneur and the acquisition.

Křetínský, whose father was a computer science professor and his mother a high-ranking judge, pursued studies in political science and law in Brno, located in the southeastern part of the Czech Republic. He later became a part of an investment firm known as J&T Finance Group, which was co-established by entrepreneur Patrik Tkáč.

Křetínský advanced to the position of equity partner at J&T, which played a significant part in his involvement with the company's 2009 separation of its coal and gas operations under the EPH brand. This move included a pipeline that transported Russian gas to Central and Eastern Europe. Křetínský expanded the EPH business by acquiring fossil fuel assets that he believed were priced lower than their true worth.

What Other Businesses Does He Own?

With his profits, Křetínský has acquired a range of assets that hold more cultural significance. These investments feature shares in the London-based football club West Ham and Sparta Prague. Additionally, he has invested in various retail companies such as the American department store Macy’s, sneaker retailer Foot Locker, the German wholesaler Metro, and he owns a 10% share in the British supermarket chain Sainsbury’s, which is part of the FTSE 100.

He has acquired various publishing titles over the years. In France, he has financial stakes in Le Monde and Libération, both of which are daily newspapers, in addition to being involved with the publisher of Elle magazine.

Křetínský's Plans For Royal Mail Revealed

Křetínský hasn't revealed much about his plans just yet. However, in his only interview following the agreement, he promised to significantly invest in the installation of delivery lockers to keep pace with what’s happening in other European nations. These lockers can greatly benefit customers by providing a convenient way to send and collect packages outside of regular hours, while also helping the company by minimizing the number of trips required to deliver to specific addresses.

Another important promise he has made is to uphold the universal service obligation, which is the law guaranteeing that all letters within the UK are priced the same. Křetínský declared he would provide a “completely clear, unconditional commitment” that Royal Mail will continue to serve as the universal service provider for “as long as I’m around.”

Will I Receive Daily Deliveries?

However, the definition of universal service is probably going to evolve. Royal Mail is aiming to limit the delivery of second-class letters to just two or three days a week. This move is expected to result in nearly 1,000 job cuts and a savings of £300 million annually.

Křetínský has expressed his support for Royal Mail's suggestions for changes that would adjust the speed of second-class letter delivery based on when the letters are mailed. First-class deliveries will still take place from Monday to Saturday.

Will Stamp Prices Increase Soon?

Křetínský hasn't shared any public plans regarding changes to stamp prices, although he does have the ability to increase costs for first-class letters.

The cost of second-class stamps is controlled by Ofcom. Starting from January 2024, they established the price for second-class stamps at 85p for the period between April 1, 2024, and March 31, 2027, with annual increases tied to inflation.

Why Is Royal Mail Now Up For Sale?

Since Henry VIII appointed the first master of posts in 1516 and Charles I established the first public postal service in 1635, Royal Mail has been under public ownership. However, this changed in 2013 when the government, led by the Conservative Party, privatized the organization.

Since that time, the company has faced numerous challenges. The government received backlash for selling shares at a price that was too low, enabling investors to earn quick profits. More recently, the company has been troubled by conflicts with its employees, leading to the resignation of chief executive Simon Thompson. Additionally, in January 2023, a ransomware attack further complicated their situation.

Amid all the chaos, the company is experiencing significant shifts in its primary operations. The surge in parcel deliveries has come as a result of the rise in online shopping, but at the same time, the number of letters being sent has dropped by 50% since 2011. Last week, Royal Mail was also penalized over £10 million by Ofcom for failing to meet its delivery goals.

What Can New Owners Not Do?

On Monday, International Distribution Services, the parent company of Royal Mail, released a detailed list of commitments designed to address concerns about potential asset stripping, which the government is wary of. For the next five years, Royal Mail is prohibited from selling any assets or distributing dividends, loans, or interest to companies owned by its parent company unless it is deemed “financially sustainable.” Furthermore, any asset sales must not jeopardize the universal service during this five-year period.

The new owners will be required to meet Royal Mail's goal of achieving net zero carbon emissions by 2040, though this commitment will last for only five years. This is a positive development for electric van manufacturers. Additionally, Royal Mail cannot move a £1 billion pension surplus out of the company for at least five years, and both the headquarters and tax residency will stay in the UK indefinitely.

Those commitments will be monitored carefully, following disputes from earlier acquisitions. Back in May 2010, the UK's Takeover Panel criticized the American food giant Kraft for failing to fulfill its promise to keep the Somerdale factory in Somerset operational during its five-month struggle to acquire Cadbury. Similarly, the FTSE 100 investment firm Melrose encountered controversy regarding the closure of a factory after it took over GKN, although it firmly refuted claims that its actions were in violation of its pledges.