The British government has approved Czech billionaire Daniel Kretinsky’s acquisition of Royal Mail, which includes commitments to maintain the UK headquarters and protect jobs. The £3.6 billion deal seeks to uphold essential services and ensure a uniform pricing system. Despite concerns from politicians, particularly the Labour Party, Kretinsky’s EP Corporate Group has pledged to preserve Royal Mail’s operations and brand while aiming to modernize the service. The acquisition is expected to finalize by early 2025.
Approval of Royal Mail’s Acquisition by Daniel Kretinsky
The British government granted its approval on Monday for the acquisition of Royal Mail, the beleaguered postal operator, by Czech billionaire Daniel Kretinsky. This decision comes with certain guarantees, including the commitment to maintain the company’s historic headquarters in the UK, which is of great symbolic importance.
Government’s Commitment to Workers and Services
The government announced that it has “reached an agreement with the potential new owners of Royal Mail” aimed at “protecting workers and essential services.” This agreement includes provisions ensuring that the headquarters remains in the UK, thereby safeguarding jobs and tax contributions, as stated in a government press release.
The acquisition offer, presented in May for £3.6 billion (€4.3 billion), has stirred controversy among politicians concerned about the future of the company following its privatization in 2013. The Labour Party, which emerged victorious in the July 4 elections, called on Mr. Kretinsky to provide “guarantees.”
EP Corporate Group, the billionaire’s company, confirmed its commitment to “preserve the vital role that Royal Mail plays in the UK” through “legally binding commitments.” This includes ensuring that any changes to the location of Royal Mail’s headquarters or operations center receive government approval.
Furthermore, the company will uphold a uniform pricing system across the UK, ensuring that first-class letters are delivered six days a week while also protecting the “Royal Mail” brand.
Business Minister Jonathan Reynolds expressed gratitude towards EP Group and Daniel Kretinsky for their constructive approach and their commitment to safeguarding this national treasure.
The acquisition of IDS, Royal Mail’s parent company, by EP Corporate Group, which already held a 27.6% stake in Royal Mail, also pertains to GLS, the international parcel delivery division. The group employs over 150,000 individuals.
With roots extending back over 500 years, Royal Mail has faced challenges in recent years, including a decline in parcel volumes, significant distribution failures, and strikes over wages. Mislav Radic, a public policy researcher at UCL, noted that it is surprising for the current Labour government to pursue this path, considering the party had previously considered renationalizing mail distribution.
Radic added that many view this decision as a betrayal within Labour and union circles, as the government seems to dismiss renationalization due to its potential costs.
Prior to the acquisition proposal, Royal Mail had indicated it might reduce delivery frequency for less urgent letters and implement hundreds of job cuts. However, EP Group has assured that it does not plan “significant changes to the workforce” beyond those previously announced.
Daniel Kretinsky emphasized that EP Group is a long-term, dedicated investor with the goal of transforming Royal Mail into a modern and efficient postal service that provides high-quality offerings.
After a challenging previous fiscal year, IDS reported a return to profitability for the year ending in March and significantly reduced its losses in the first half of the current fiscal year.
Having built his wealth through fossil fuels, Daniel Kretinsky has diversified his investments across various sectors and countries, including media and retail, notably acquiring control of Casino in France earlier this year. EP Group anticipates completing the acquisition of IDS by the first quarter of 2025.