In a significant move for one of the world’s oldest postal services, the UK government has approved Czech billionaire Daniel Kretinsky’s EP Group to acquire Royal Mail in a £3.57 billion ($4.5 billion) deal. The decision follows extensive scrutiny by the government, which took national security concerns into account due to the vital role Royal Mail plays in the country’s infrastructure.
The acquisition, initially agreed in May, will see EP Group, which already holds the largest stake in Royal Mail’s parent company, International Distribution Services (IDS), take full control. However, the deal has been conditional on a series of commitments that the government believes will secure the future of Royal Mail, its workforce, and its customers.
National Security Concerns Addressed
Business Secretary Jonathan Reynolds announced on Monday that EP Group had made significant assurances, which were key to securing approval for the deal. Notably, EP Group has agreed to protect Royal Mail’s postal network, ensuring that the service remains rooted in the UK. The government has also secured what is known as a “golden share,” which grants it enhanced oversight over critical decisions, including the protection of Royal Mail’s headquarters and the continuation of its UK tax obligations.
Reynolds emphasised that these commitments would guarantee Royal Mail’s financial stability and safeguard jobs across the country. “This is a good deal for Britain, for the people who work for Royal Mail, and for customers,” he said, further reinforcing that the terms of the deal strengthen those in place following the privatisation of Royal Mail in 2013.
The golden share is a key component of the agreement. It ensures that, despite the acquisition by Kretinsky’s EP Group, Royal Mail’s operations will remain aligned with the country’s interests. The deal also includes measures to preserve Royal Mail’s brand and its Crown cypher, a symbol of the company’s long history dating back to the sixteenth century.
Unions and Workers’ Rights
In an important step toward securing the future of the company’s workforce, EP Group has reached agreements in principle with Royal Mail’s unions. This commitment has been welcomed as a critical part of ensuring that the postal network continues to serve both workers and customers effectively. These agreements indicate a collaborative approach to modernising Royal Mail, balancing the company’s financial objectives with the protection of workers’ rights.
Kretinsky, a former investment bank lawyer who now heads Energeticky a Prumyslovy Holding (EPH), one of Europe’s largest energy groups, has been diversifying his investments into various sectors, including retail and media. He expressed confidence in the long-term success of the Royal Mail venture. “We look forward to delivering on this mission alongside our partners in government,” he said in a statement, underscoring his commitment to transforming Royal Mail into a successful modern postal operator.
A Historic Sale
The privatisation of Royal Mail in 2013 was a landmark event in the UK’s economic history, with the state selling off its shares in the company at an initial price of 330 pence each. Kretinsky, who has steadily increased his holdings in IDS over the years, already owned a significant portion of the company before finalising the takeover.
The acquisition deal, which values IDS shares at 370 pence each, also includes a commitment to maintain a ‘one-price goes anywhere’ postal service that will operate six days a week, a promise that has been integral to maintaining the public service aspect of Royal Mail.
While the deal has received government approval, it remains subject to certain remaining shareholder and regulatory approvals. If all goes as planned, EP Group expects the acquisition to be completed in the first quarter of 2025.
A Modern Vision for Royal Mail
Kretinsky’s vision for Royal Mail is clear: he intends to modernise the service while preserving its core values. The British government’s oversight mechanisms, including the golden share, aim to ensure that any changes implemented will be in the long-term interests of the country, its workers, and its customers.
For now, the deal represents a new chapter in the storied history of Royal Mail, one of the world’s oldest postal services. Under the new ownership of EP Group, the company faces the challenge of adapting to the digital age while continuing to fulfil its traditional role as a vital public service.
As the deal moves towards completion, both Kretinsky and the British government have pledged to work closely to ensure that Royal Mail remains a strong and reliable part of the UK’s infrastructure for years to come. The acquisition is expected to bring stability to the company, which has faced significant challenges in recent years, including declining letter volumes and ongoing industrial action.
In the coming months, the focus will be on ensuring that all regulatory conditions are met and that the transition to new ownership proceeds smoothly, with the hope that the agreement will pave the way for a bright and secure future for one of Britain’s most iconic institutions.