16th Dec 2024 09:17
(Alliance News) - Royal Mail's takeover by a Czech billionaire has been given the green light by the UK government, allowing the postal service to pass into foreign ownership for the first time.
PA reports that permission for the sale of owner International Distribution Services PLC to Daniel Kretinsky's EP Group AS is set to be officially announced later on Monday morning after being reviewed by the government under the National Security & Investment Act.
EP Group early Monday said it has entered legally binding undertakings with the UK Department for Business & Trade "safeguarding the important role that Royal Mail plays in the UK". These commitments include that, for three years following completion of the acquisition, there will be no change of control of Royal Mail or of the international parcels arm of IDS and that Royal Mail will continue as the UK's universal service provider, offering a "one-price-goes-anywhere" service and delivering first class post six days a week.
EP Group also said it has reached agreements in principal with Royal Mail unions the Communication Workers Union and the Communication Managers Association, part of Unite. The agreements still need internal approval by CWU and CMA Unite.
Kretinsky and IDS agreed a deal in May but have 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.
There were already a number of pledges made by Kretinsky when the proposed deal was announced, including a vow to keep the brand name and retain Royal Mail's headquarters and tax residency in the UK for the next five years, as well as commitments to protect the company's universal service obligations.
But Kretinsky – who is nicknamed the Czech sphinx – is believed to have made several further concessions to gain government approval, including allowing workers to get a 10% share of any dividends paid to him.
The government will also reportedly keep a so-called 'golden share' in the postal service, meaning it will need to approve any key changes to Royal Mail's ownership, headquarters location and tax residency.
Other previous commitments from Kretinsky include a guarantee not to raid the pensions surplus and to respect union demands for no compulsory redundancies until 2025.
Unions are understood to have been pushing for further assurances and for the commitment over compulsory redundancies to be extended.
On Friday, Royal Mail was fined GBP10.5 million by regulator Ofcom for missing its post delivery targets in the 2023-2024 financial year.
The watchdog said just under three-quarters of first class post was delivered on time during the period, well short of its 93% target, and 92.7% of second class post was delivered on time, below its 98.5% target.
The fine is the second in two years, after the watchdog also gave Royal Mail a GBP5.6 million penalty in November 2023.
Ofcom Chief Executive Melanie Dawes, told BBC Breakfast on Monday: "The government has obviously cleared the deal today, but Ofcom's focus is to make sure that Royal Mail delivers for its customers."
She said 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 said.
Dawes added: "Ultimately though it is up to the company, under their new ownership, to deliver now.
"They've got a lot of changes that they need to make, some of that is 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."
IDS shares were up 0.9% to 362.20 pence early Monday in London. Under the terms of the GBP3.57 billion takeover offer from EP Group, shareholders will receive 370p per share.
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