Royal Mail’s parent company, International Distribution Services (IDS), has announced its approval of a multi-billion pound takeover bid by Czech billionaire Daniel Kretinsky. This decision comes after a formal offer was made by Kretinsky earlier this month. The deal, valued at £3.6bn and including debt, values the company at £5.3bn.
The agreement includes a series of “contractual commitments” to protect the public service aspects of Royal Mail, such as its universal service obligation to provide “one-price-goes-anywhere” first-class post six days a week. EP Group, which is owned by Kretinsky, already holds a 27.6% stake in the company.
The takeover deal will be voted on by shareholders at IDS’s next annual general meeting in September. However, it is expected to face scrutiny from regulators before it can be finalized. Kretinsky, nicknamed the “Czech Sphinx” due to his enigmatic nature, also owns parts of West Ham Football Club and Sainsbury’s.
Under the proposed deal, EP Group would purchase IDS for 370p per share, with Royal Mail retaining its branding and UK headquarters. The company has also assured that the employment rights of all staff will be protected and that there are no plans for material changes to headcount or reductions in front-line workers.
However, concerns have been raised by unions and senior politicians about the potential takeover of the postal service, which was privatized in 2013. The Labour Party has called for a commitment that Royal Mail remains domiciled in the UK and continues to pay taxes as part of any deal.
In response to the announcement, shadow business secretary Jonathan Reynolds stated that the assurances provided by IDS are welcome, and that a Labour government would ensure they are adhered to. Business Secretary Kemi Badenoch has also met with IDS representatives to discuss the takeover and has urged them to protect services for vulnerable individuals, those in remote areas, and small businesses.
General secretary of the Communication Workers Union, Dave Ward, expressed some approval for the commitments made by IDS, but also stated that postal workers across the UK have lost faith in the company’s senior management and that the service has been deliberately run down. The union plans to meet with EP Group next week to call for a reset in employee and industrial relations, as well as further commitments for the company’s future. They also plan to engage with the Labour Party and other stakeholders to advocate for a new model of ownership for Royal Mail, giving employees and customers a direct say in key decisions.
Kretinsky has described Royal Mail as “part of the fabric of UK society” and has stated that owning the business comes with a great responsibility to both employees and citizens who rely on its services every day. This comes after the company proposed shake-up plans to Ofcom as part of turnaround efforts, including reducing some deliveries. The regulator has also launched an investigation into the company’s delivery performance, following their admission that less than three-quarters of first-class post was delivered on time in the last year.
