Royal Mail update issued on £3.6billion takeover by Czech billionaire – what it means for your post

6 days ago admin

The Government has approved the sale of Royal Mail to a Czech billionaire.

Tycoon Daniel Kretinsky’s £3.6billion takeover of the postal giant’s parent company, International Distribution Services (IDS) was given the go-ahead after agreeing a raft of legally-binding commitments over the postal service, Business Secretary Jonathan Reynolds has confirmed.

It paves the way for Royal Mail – which can trace its roots back more than 500 years – to fall into foreign ownership for the first time.

The Communication Workers Union confirmed it had reached a settlement with Mr Kretinsky’s EP Group, covering areas such as job security, governance of Royal Mail, a stake in the business for staff, and legally binding commitments and improving the terms and conditions of our members.

Mr Reynolds said: "For too many years progress on securing a stable future at Royal Mail has stalled, but from day one we have been committed to providing a secure future for thousands of workers and customers."

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

Keith Williams, chair of IDS, said: “Today’s announcement marks an important milestone in the approvals process. The IDS Board welcomes the Government’s endorsement and legal backing for the comprehensive package of undertakings and commitments we negotiated.

Tycoon Daniel Kretinsky has given personal assurances in order to secure takeover
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"These 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 United Kingdom.

“We welcome the Government’s commitment to secure a stable future for Royal Mail. This will not come from a change in ownership alone but must also be backed by urgent reform of the Universal Service and the continued transformation of this great British business.”

The takeover is expected to be completed early next year.

Energy magnate Mr Kretinsky, who owns a big stake in West Ham United and 10% of Sainsbury’s, has given a series of guarantees to secure the takeover International Distribution Services (IDS), which includes parcel firm GLS. They are believed to include allowing workers to get a 10% share of any dividends paid out to him.

At the moment, there has been no changes announced that would impact how often your post is delivered. Mr Kretinsky told the BBC earlier this year that he would honour the Universal Service Obligation – in whatever form it takes – "for as long as I am alive".

The USO means it has to deliver letters six days per week, Monday to Saturday, and parcels Monday to Friday. A legal agreement put in place means the USO will be kept while Mr Kretinsky's company owns Royal Mail. However, regulator Ofcom is looking at allowing second class post on a Saturday to be scrapped and only happen every other day in the week. These "less urgent" letters would be delivered three days a week in one week and two in the next.

Royal Mail has suffered heavy losses and missed delivery targets
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The Government will keep a so-called “golden share” that will mean it needs to approve any key changes to Royal Mail’s ownership, headquarter location and tax residency. He had already guaranteed not to raid the pensions surplus, to maintain the universal service and to keep the brand name and Royal Mail’s headquarters and tax residency in the UK for the next five years.

Mr Kretinsky and IDS had reached an agreement in May on the deal, which was expected to undergo intense government scrutiny, especially during an election year. Royal Mail has struggled with labour strikes, competition and loss of market share.

Last week, industry regulator Ofcom imposed a £10.5million fine on Royal Mail for failing to meet delivery targets over the past year. Dave Ward, general secretary at the Communication Workers Union, said: “At the same time as this agreement is announced, we are pleased to have reached a negotiators settlement with EP Group covering crucial areas such as job security, the governance of the company, a meaningful stake in the business for employees, restoring quality of service, legally binding commitments and improving the terms and conditions of our members. This agreement provides the foundation to rebuild Royal Mail.

“These have been challenging negotiations but through the support of our members we have delivered what by any measure is a groundbreaking agreement which puts postal workers and customers back at heart of everything we do in Royal Mail.

“Ultimately, the CWU will always campaign for Royal Mail to be returned to public ownership, but the reality is once it became clear the government would support this takeover, our role as a trade union was to do everything possible to protect our members.

“The other major factor here is whilst many will fear Royal Mail falling into the hands of a foreign equity investor, the truth is that the status quo is what will kill off postal services in the UK. The Royal Mail Group Board have been running the company into the ground over a sustained period and in the process have completely alienated their own workforce. It is time for a fresh start and a complete re-set of employee and industrial relations. If the takeover is completed, we will make sure every aspect of our agreement with EP Group is upheld in full.”

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