Křetínský expressed his deep admiration for Royal Mail’s legacy and history in a statement on Wednesday morning.
The terms and conditions of its owner’s £3.57 billion offer have been agreed upon, bringing the takeover of Royal Mail by Czech billionaire Daniel Křetínský one step closer.
The parent business of the postal service, International Distribution Services, updated the market on Wednesday stating that it had accepted a cash offer from Křetínský’s EP Group.
As per the agreement, Křetínský, who grew to prominence in the energy sector and had a minority interest in a major gas pipeline connecting Russia to Europe, would have to pay 360p per share for the remaining 73% of the beleaguered postal service that he does not already possess.
When markets opened, IDS shares increased by 3% to 331p, still significantly less than EP’s offer, indicating that the market is still not certain the acquisition will close.
The National Security and Investment Act, which gives ministers the authority to halt the sale of businesses deemed to be essential components of the country’s infrastructure, has left investors waiting to learn whether the British government will decide to investigate the sale of the formerly state-owned service to a foreign buyer. IDS executives met with Kemi Badenoch, the business minister, earlier this month to talk about the bid and changes to the universal service obligation (USO), which provides delivery to every UK household six days a week.
On September 25, at the annual general meeting, a shareholder vote is planned.
Though Jeremy Hunt, the chancellor, had earlier stated that any bid for the Royal Mail would be subject to a “normal” security examination, the government was in favour of EP’s ownership in theory.
After the 4 July election, Labour, which is expected to form the next government, appreciated Křetínský’s guarantees and said that, should it win power, it would make sure they were followed.
The team led by Křetínský has suggested agreements and contracts with the government and labour unions, such as:
- The Royal Mail’s offer to the USO for a first-class postal service that would be available six days a week, for a fixed price, to any location in the nation for a minimum of five years. Second class posts might only be made every other weekday, according to IDS’s suggestion.
- Five years of headquarters and tax residency will be maintained in the UK.
- Keeping employees’ base pay and benefits for a minimum of two years.
- Three years with no ownership changes for Royal Mail.
Additionally, EP stated that it will talk to unions about extending the present agreement that prohibits mandatory layoffs past April 2025 and that it has no plans to materially alter the total workforce or decrease the number of frontline employees in Royal Mail.
With EP Group’s assistance, Royal Mail has requested permission to cut back on second-class mail deliveries from six days a week to every other day. This would result in up to 1,000 voluntary layoffs and a net reduction of 7,000-9,000 daily delivery routes.
The Communication Workers Union, which represents the majority of Royal Mail employees, said that it will meet Křetínský the next week to discuss the company’s future and to seek a fresh start in labour and industrial relations. The current contractual duties and time constraints in the agreement, according to a CWU representative, are not “good or strong enough”.
“We’ll be looking for pension guarantees, we’ll be looking for a stake for the employees in the future ownership model of the business,” Dave Ward, general secretary of the CWU, stated on the BBC Radio 4’s Today show on Wednesday.
Apart from managing the mail service, Royal Mail also possesses over 1,300 properties, several of which are extremely desirable London locations, like those in Paddington and Farringdon. It sold a prestigious London site at Nine Elms, close to Battersea, for 101 million in 2019.
Hours before Wednesday’s “put up or shut up” deadline of 5 p.m., the £3.57 billion bid – which had been enhanced from an earlier £3.1 billion offer that IDS claimed severely undervalued the company – was formally submitted.
The EP offer might be up to £3 million to the current and past directors of Royal Mail, while up to £3,400 could be paid out to postal workers who held onto shares they received after the 2013 privatisation.
Micheal Seidenberg, the IDF’s chief executive, stands to collect £264,000 from the 71,400 shares he owns, while Keith Williams, the chair, is expected to receive £210,000. Additionally, Seidenberg received up to 436,000 shares under a long-term incentive plan, with the potential value of up to £1.6 million under the EP offer.
Known as the “Czech Sphinx” due to his aversion to public speaking, Křetínský is a burgeoning investor in the UK, holding shares in Sainsbury’s and the West Ham football team.
Křetínský, one of the richest people in the Czech Republic, amassed his fortunes from coal and gas, and he also held a minority interest in Eustream, a Slovakian pipeline that transports gas from Russia to Ukraine and western Europe.
Due to his history with highly polluting coal businesses and concerns that he could try to gain control over the publication, editors and journalists opposed his controversial purchase of a share in the French daily Le Monde in 2018.
Last summer, Křetínský assured the Times that he would not want to interfere with the paper’ editorial independence. A representative for EP also mentioned that the company was a major investment in renewable energy and that it intended to phase out all coal in its portfolio by 2030.
In September of last year, he sold his Le Monde shares to co-owner Xavier Niel, who promised to put them in a trust.
Křetínský expressed his deep admiration for Royal Mail’s legacy and history in a statement on Wednesday morning. He also acknowledged that becoming the company’s owner included significant responsibilities. “But IDS’s market is evolving quickly, and it must accelerate its transformation and investments into modernisation to keep up with the competition,” he continued.
“We will support the business in the next critical phase of its transformation and beyond, providing our experience and financial resilience to support the management team.”