Czech billionaire closes in on deal to buy Royal Mail
3 min read
Czech billionaire Daniel Kretinsky is on the verge of finalizing a deal to acquire Royal Mail through his EP Group, with confirmation expected within the next two weeks, according to sources close to the transaction. Kretinsky has agreed to make additional concessions to ensure the takeover proceeds smoothly, according to reports from the BBC.
Unions have held discussions with Kretinsky’s advisors this week. Although some remain cautious about the billionaire’s intentions, the Communication Workers Union (CWU) has stated that talks with EP Group have been “constructive.” The union’s cautious stance reflects broader concerns, but they acknowledged that the meetings were positive.
The deal still requires approval under the National Security and Investment Act, although a similar review was conducted when Kretinsky increased his stake in Royal Mail. As part of the negotiations, Kretinsky has made a number of significant commitments to secure the deal. These include maintaining Royal Mail’s “universal service” obligation, which guarantees daily letter deliveries Monday to Saturday and parcel deliveries Monday to Friday. He has also pledged not to raid the pension surplus, to keep the Royal Mail brand and its headquarters in the UK for at least five years, and to respect union demands for no compulsory redundancies until 2025.
Additional safeguards, including the extension of these guarantees, are expected to be part of the final deal. Sources suggest that these commitments have been sufficient to reassure the UK government that Kretinsky is a suitable owner for the historic postal service.
In a statement before MPs on Tuesday, Business Secretary Jonathan Reynolds described Kretinsky as a “legitimate business figure,” noting that any concerns regarding his alleged ties to Russia were reviewed when he became the largest shareholder in the company. These concerns were dismissed at the time, and no new issues have emerged in the current negotiations.
The CWU has echoed this sentiment, stating that meetings with the EP Group have been “honest and constructive,” and further discussions are planned in the coming days.
Royal Mail’s parent company, International Distribution Services (IDS), has recommended the £3.6 billion offer from Kretinsky’s EP Group to its shareholders, and it is expected that enough shareholders will accept the offer to finalize the deal. Royal Mail has faced significant challenges in recent years, with its performance declining and the company suffering heavy financial losses. Customers have expressed dissatisfaction with delayed deliveries, particularly regarding important documents such as medical appointments and legal papers.
The volume of letters sent in the UK has also seen a sharp decline, with the number of letters posted halved since 2011. In contrast, parcel deliveries have grown in popularity, becoming a more profitable part of Royal Mail’s business.
IDS, which owns Royal Mail, reported a modest profit last year, but it was entirely driven by its logistics and parcel business in Germany and Canada. The losses at Royal Mail itself were offset by these international operations. Amid these challenges, Royal Mail has proposed reforms to the universal service obligation, suggesting that reducing second-class deliveries to every other weekday could save up to £300 million annually and give the business a better chance to recover.
Kretinsky has expressed support for these reforms, while also committing to maintaining the universal service obligation for as long as he is in charge. He has emphasized that his intention is to ensure Royal Mail’s long-term success while adapting to the changing postal and logistics landscape.
Kretinsky’s EP Group has declined to comment publicly on the deal, and the UK Department for Business has also been contacted for a statement. However, it is understood that the deal is in its final stages, and once approved, it will mark a significant shift in the future of Royal Mail, with the company moving into the hands of a Czech billionaire after years of financial struggles.
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