Royal Mail’s sale to Czech billionaire Daniel Kretinsky has been cleared by the Government, paving the way for the more than 500-year-old postal service to pass into foreign ownership for the first time.
Business Secretary Jonathan Reynolds confirmed the Government had secured a raft of legally binding commitments with Mr Kretinsky’s EP Group over the postal service, including protecting the one-price-goes-anywhere delivery commitment and a pledge to keep Royal Mail headquartered in the UK.
Mr Kretinsky and International Distribution Services agreed to a deal worth £3.6 billion – or £5.3 billion including debt – in May but had been waiting for approval from the Government, which must sanction the takeover given the national importance of Royal Mail and the postal service in the UK.
Mr Reynolds hailed the proposed takeover as being beneficial for the UK, Royal Mail workers and customers.
He said: “This would be a good deal for the UK, be a good deal for the people who work for Royal Mail, and, of course, would be a good deal for the customers.”
He added: “We have negotiated something which secures the long-term future of Royal Mail and gives it the fresh start that we need.
“If this takeover goes ahead, we’re going to be in a stronger position than we otherwise would have been.”
Mr Kretinsky said they had worked to ensure “unprecedented commitments and undertakings that demonstrate the high regard EP Group has for Royal Mail as an institution, the service it provides to millions of UK homes and businesses, and Royal Mail employees”.
It sees the biggest hurdle overcome for the deal to go through, with the takeover now expected to complete early in 2025.
There were already a number of pledges made by Mr Kretinsky when the proposed deal was announced, including a vow to keep the brand name and retain Royal Mail’s HQ and tax residency in the UK for the next five years, as well as commitments to protect the company’s universal service obligations.
As part of the commitments, EP Group said it will also ensure that Royal Mail complies with regulatory conditions and that it will not undergo any changes to its corporate structure.
Keith Williams, chairman of IDS, said the agreement between EP Group and the Government “marks an important milestone in the approvals process”.
He said the commitments “provide our customers, colleagues, unions, regulators and broader stakeholders with safeguards for the provision of the Universal Service Obligation, the ongoing financial stability of Royal Mail, the maintenance of colleague benefits, and Royal Mail’s broader role in the UK”.
Under its service obligations, Royal Mail must deliver letters six days a week to all 32 million addresses in the UK for the price of a stamp – a requirement stipulated by law under the Postal Services Act 2011.
But Royal Mail has repeatedly called for an overhaul of the service, claiming it is not finally viable.
Mr Reynolds said the universal service was a “fundamental part of this agreement”, but that all parties were “pragmatic and understand that the letter market has declined a lot in recent years”.
Regulator Ofcom has been reviewing the future of the universal service since January and is proposing plans to ditch Saturday deliveries for second-class letters while keeping first-class mail six days a week.
On Friday, Royal Mail was fined £10.5 million by Ofcom for missing its first and second-class postal delivery targets in 2023-24.
Ofcom chief executive Dame Melanie Dawes told BBC Breakfast on Monday there were “real questions about what the service needs to be, going into the future”.
She said: “We will be coming forward next year with proposals to make sure that it is sustainable, and absolutely we will hold Royal Mail to account in delivering – whatever that final outcome is.”
