The proposed Royal Mail buyout by Czech billionaire Daniel Kretinsky’s EP Group has been a prominent story, signaling a strategic move to acquire a historic British institution. This significant transaction, now approved by shareholders and the UK government, will see the 500-year-old postal service pass into foreign ownership for the first time, marking a new chapter in its long history.
Kretinsky’s interest in Royal Mail reflects a broader strategic play to build a pan-European logistics business. His EP Group already has extensive interests in energy infrastructure and various European companies, and acquiring Royal Mail’s parent company, International Distribution Services (IDS), is seen as a way to expand his reach in the parcel delivery sector, leveraging Royal Mail’s extensive network.
The deal, valued at £3.6 billion (or £5.3 billion including debt), has been subject to intense scrutiny, particularly due to the national importance of Royal Mail as a vital piece of the UK’s infrastructure. The UK government granted approval after Kretinsky provided legally binding commitments, including maintaining the Universal Service Obligation (USO) to deliver mail six days a week.
These commitments also include pledges to keep the Royal Mail brand name, its headquarters, and tax residency in the UK for at least five years. Furthermore, a “golden share” will be retained by the government, granting it veto power over major changes to the company’s ownership or core operations, ensuring public interest safeguards.
For Royal Mail itself, this buyout presents an opportunity for much-needed investment and modernization. The company has faced significant challenges in recent years, including declining letter volumes, industrial disputes, and intense competition in the growing parcel market. Kretinsky aims to bring in parcel know-how from his other ventures to help Royal Mail claw back market share.
The acquisition has also involved agreements in principle with unions, including a commitment to a 10% share of any dividends paid out to Kretinsky for workers, and the formation of a new workers’ group for greater employee voice.