Czech billionaire closes in on takeover deal
The sale of Royal Mail to Czech billionaire Daniel Kretinsky’s EP Group is close to being finalized and could be confirmed within the next two weeks, according to people familiar with the matter.
The BBC understands Kretinsky has agreed to make additional concessions to complete the takeover.
The union has been meeting with Kretinsky’s advisers this week and while some sources said they remained “wary” of him, the Communications Workers Union (CWU) said meetings with EP Group had been “constructive”.
While officials conducted similar scrutiny as he increased his stake in the company, the deal still needed to be approved under the National Security and Investment Law.
To secure the deal, the entrepreneur has provided the following guarantees:
- Maintain a one-rate “universal service”, meaning it must deliver letters six days a week (Monday to Saturday) and parcels Monday to Friday
- Not plundering pension surpluses
- Keep brand name, Royal Mail headquarters and tax residence in the UK for the next five years
- Respect union demands not to impose compulsory redundancies (before 2025)
It is thought that additional safeguards may include extending the duration of the guarantees he has given.
The BBC understands they have done enough to convince the British government that Daniel Kretinsky is the right owner of this important and historic organisation.
Speaking before MPs on Tuesday, Business Secretary Jonathan Reynolds described him as a “legitimate business figure” whose alleged links to Russia had been scrutinized and dismissed when he became the company’s largest shareholder.
A spokesman for the CWU said its meetings with EP Group had so far been “honest and constructive and will continue over the coming days”.
The board of Royal Mail parent company International Delivery Services (IDS) has recommended a £3.6 billion takeover price to its shareholders and expects a sufficient number of shareholders to accept it to allow the deal to go ahead.
Royal Mail, which was spun off from Britain’s Post Office and privatized a decade ago, has seen its performance deteriorate in recent years, leading to serious financial losses.
Customers also complained about delivery issues, with important medical appointments and legal documents not arriving on time.
The number of letters sent in the UK has also fallen significantly, halving compared with 2011.
At the same time, package delivery became more popular and more profitable.
Parent company IDS posted a small profit last year, which came entirely from its logistics and parcels operations in Germany and Canada, offsetting Royal Mail losses.
Universal service obligations are currently under review, with Royal Mail recommending to regulator Ofcom that reducing second-class deliveries to every other working day could save up to £300m a year and give the business a “fighting chance”.
In an interview with the BBC earlier this year, Kretinsky said he would fulfill his universal service obligation “as long as I’m alive” but backed Royal Mail’s proposed reforms.
Mr. Kretinsky’s EP Group declined to comment. We also reached out to the Department of Commerce for comment.
