What Does Daniel Křetínský’s Takeover Mean For The Future Of Royal Mail?

This will be the first time a foreign company will own Royal Mail.

Daniel Kretinsky, pictured in Prague last year. Photo Credit: Reuters

After his £3.57 billion ($4.6 billion) acquisition bid was accepted by International Distribution Services (IDS), Czech billionaire Daniel Křetínský will soon acquire Royal Mail, one of the most prestigious and historic institutions in Britain. This will be the first time a foreign company will own Royal Mail.

The arguments

National concerns

The sale of one of Britain’s oldest and most iconic institutions to a foreign company for the first time has sparked anxiety about the future of a key piece of national infrastructure.

Union scepticism

The Communication Workers Union (CWU), which represents over 110,000 Royal Mail workers, remains sceptical. General Secretary Dave Ward criticised the privatisation and recent management, calling for more concrete guarantees from the EP Group.

Political sensitivity

With the UK general election approaching, the future of Royal Mail hangs in the balance, making this a critical time for the country’s postal service and its employees.

Labour Party representatives have expressed serious concerns about the Royal Mail’s British identity and public service function. Jonathan Reynolds, Labour’s business spokesperson, stated that the party will take steps to ensure Royal Mail’s position in public life.

Křetínský’s responsibility

Křetínský has also acknowledged the significant responsibility of owning Royal Mail. The billionaire called for the need for modernization to keep up with rival delivery services in a rapidly evolving market.

The facts

The bid offers £3.70 per share.
Royal Mail reported a £348 million ($445 million) loss for the year ending March 31, slightly better than the previous year’s £419 million ($536 million) loss.
According to reports, EP Group has promised to uphold Royal Mail’s “universal service obligation,” ensuring six-day-a-week letter delivery across the UK at a flat rate. They also pledged to maintain employee benefits, pensions, and keep Royal Mail’s headquarters and tax base in the UK.
Křetínský’s Vesa Equity Investment already owns a 27.6% stake in IDS.
The proposed takeover comes just before the UK’s general election on July 4 and will be subject to a national security review.