London (AFP) – Britain’s centuries-old Royal Mail is set to pass into foreign ownership after the UK government Monday approved the takeover of its parent company by Czech billionaire Daniel Kretinsky’s EP Group. The takeover of International Distribution Services (IDS) is worth £3.6 billion ($4.5 billion). The deal “protects workers and key services whilst seeing Royal Mail continue to be headquartered in Britain, securing jobs and tax receipts in the UK,” the government said in a statement.
The government will hold a “golden share” in the former state monopoly Royal Mail, which ensures it has veto power over the postal operator’s headquarters being moved abroad and over changes to its tax residency. Both parties have been waiting for the government green light since IDS in May accepted the takeover offer from the EP Group, which already held a near 28-percent stake.
“For too many years progress on securing a stable future at Royal Mail has stalled,” Business Secretary Jonathan Reynolds said. “We are working towards ensuring a financially stable Royal Mail with protected links between communities other providers can’t reach,” he added. Kretinsky made a series of guarantees to gain government approval, notably maintaining the Universal Service Obligation to deliver mail six days a week to all 32 million UK addresses for the price of a stamp.
“EP Group is a long-term and committed investor with a mission to make Royal Mail a successful modern postal operator with high-quality service and products for its customers,” Kretinsky said in a statement Monday. Royal Mail, which was privatised in 2013, has suffered in recent years from falling parcel volumes, delays in delivering mail, and strikes over pay.
Monday’s announcement comes after Britain’s communications regulator Ofcom last week fined the postal operator £10.5 million for delays in delivering mail. Ofcom has previously proposed that Royal Mail cut delivery to five days a week, or even just three days, potentially saving the company hundreds of millions of pounds.
The EP Group also announced Monday it had reached an agreement in principle with the main unions representing postal workers, CWU and CMA Unite. “Whilst many will fear Royal Mail falling into the hands of a foreign equity investor, the truth is every postal worker knows the status quo is what will kill off postal services in the UK,” CWU general secretary Dave Ward said in a statement on the union’s X account.
IDS employs about 153,000 staff, with the vast majority representing Royal Mail. It has also seen its core letters business ravaged as consumers increasingly communicate online, which has conversely helped its international parcels business, GLS. The takeover is “a historic moment, given Royal Mail’s long record of service to the UK public,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
She added that while there are opportunities to modernise the UK’s postal infrastructure, “any reforms are likely to be a long time coming.” The EP Group expects to finalise the acquisition during the first quarter of 2025.
© 2024 AFP
