Royal Mail takeover by Czech billionaire Daniel Kretinsky given go-ahead by Government

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Royal Mail's historic acquisition by Czech tycoon Daniel Kretinsky has been approved by the Government, marking the first time the postal service will fall under foreign ownership.

Sources say that the sale of International Distribution Services (IDS) to Kretinsky's EP Group is poised for an official announcement this Monday morning following scrutiny under the National Security and Investment Act.

The duo reached a mutual agreement in May, with finalisation hinging on Government consent due to Royal Mail's significance within the UK. Key commitments from Mr. Kretinsky were already established at the time of the deal's proposal, promising to keep the trademark intact and maintain both the HQ and tax residency in the UK for a minimum of five years.

Additionally, he assured the upholding of the company's universal service obligations. Known as the 'Czech sphinx', Mr. Kretinsky is reported to have offered further concessions to secure the green light from authorities. These include granting workers a 10% share of any dividends he receives.

In line with ensuring continued national influence, the Government is expected to retain a "golden share" in Royal Mail, bestowing upon it the power to sanction significant decisions regarding ownership, relocation of headquarters and tax residency changes.

Previous promises from Mr Kretinsky include a pledge not to dip into the pension surplus and to heed union calls for no forced redundancies until 2025. Unions are reportedly pressing for additional guarantees and want the commitment to avoid mandatory layoffs extended.

On Friday, Royal Mail was slapped with a £10.5 million fine by regulator Ofcom for failing to meet its postal delivery targets in the 2023-2024 financial year. The authority pointed out that just below three-quarters of first class post arrived on schedule during this time, significantly lower than the 93% goal, while 92.7% of second class post reached its destination as expected, still below the 98.5% objective.

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This penalty marks the second within two years, following the previous £5.6 million fine imposed on Royal Mail by the regulator in November 2023. Speaking to BBC Breakfast on Monday, Ofcom chief executive Dame Melanie Dawes commented: "The Government has obviously cleared the deal today, but Ofcom’s focus is to make sure that Royal Mail delivers for its customers."

She mentioned that there are "real questions about what the service needs to be, going into the future".

"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," she continued. Dame Melanie also stressed: "Ultimately though it is up to the company, under their new ownership, to deliver now."

She noted that significant changes are necessary, partly because "the letter business is changing so much."

"We understand that that is hard, but they’ve got to get on with it to make sure they continue to deliver for the public and do so better than they have done in recent years, to be honest."

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