Royal Mail takeover by Czech billionaire approved

The sale of Royal Mail's parent company to a Czech billionaire has been cleared by the government.

The £3.6bn takeover by Daniel Kretinsky's EP Group has been given the go-ahead after agreeing "legally binding" undertakings.

The government will retain a so-called "golden share" that will require it to approve any major changes to Royal Mail's ownership, HQ location and tax residency.

EP Group will also have to maintain the one-price-goes-anywhere Universal Service Obligation (USO), which currently means it has to deliver letters six days per week, Monday to Saturday, and parcels Monday to Friday.

The takeover of Royal Mail's parent company, International Distribution Services (IDS), is expected to be completed early next year. When debts are included, the deal values the company at £5.3bn.

Business Secretary Jonathan Reynolds said while it was up to shareholders to approve the deal, the agreement the government had reached meant the takeover "will be a good deal for the UK, be a good deal for the people who work for Royal Mail and a good deal for customers".

Mr Kretinsky said the talks with the government had "resulted in unprecedented commitments and undertakings.

He added, that EP Group had a "mission to make Royal Mail a successful modern postal operator with high quality service and products for its customers".

IDS also owns a highly profitable European parcels business called GLS which made over £300m last year. This offset losses at Royal Mail, allowing IDS to report a small profit.

By bringing GLS parcel know-how to the UK market, coupled with investment in out-of-home delivery lockers, Mr Kretinsky hopes to build a pan-European logistics business.

The hope is that this will enable Royal Mail to claw back market share it has lost in recent years in the profitable and growing parcels business.

Mr Kretinsky has a net worth of £6bn, according to the Sunday Times Rich List.

In addition to owning 27% of West Ham United football club and 10% of Sainsbury's, Mr Kretinsky's companies also own a gas transmission service which still pipes much reduced levels of Russian gas to Europe, paid for and with the consent of the EU.

Earlier this year the takeover was called in for review under national security laws as Royal Mail is considered vital national infrastructure.

But speaking in front of MPs in November, Reynolds had referred to Mr Kretinsky as a "legitimate business figure" whose alleged links to Russia had already been reviewed and dismissed when he became the biggest shareholder in the company nearly two years ago.

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