Royal Mail has been cleared to be taken into foreign ownership for the first time in its 508-year history.
Czech billionaire Daniel Kretinsky has been given the the green light to buy Royal Mail’s parents company International Distributions Services (IDS) by ministers after providing undertaking about its future, it was confirmed today.
In an announcement to the stock exchange Kretinsky’s company EP Group said it has given undertakings to the government to maintain the universal service obligation to operate a six days a week first class "one-price-goes-anywhere" delivery service throughout its period of ownership.
However, the second class service is likely to be pared back to every other day.
The undertakings come just days after Royal Mail was fined £10.5m by the regulator Ofcom for failing to meet delivery targets for first and second class mail.
Other undertakings include keeping Royal Mail’s maintain their headquarters and tax residency in the UK for at least five years. This pledge will be backed by the issue of a golden share to the British government.
There are also commitments on making payments of dividends, share buybacks or other distributions only if Royal Mail is in a “robust, financially sustainable position.”
EP also said it has reached an agreement “in principle” with Royal Mail’s main union, the CWU, which represents frontline workers in Royal Mail, and with CMA Unite, which represents Royal Mail's managers.
In a statement, EP said on Monday: “Having worked closely with the secretary of state for the department for business and trade, Bidco and EP are pleased to announce that they have entered into legally binding undertakings, conditional upon completion of the acquisition.”
IDS chair Keith Williams said: “The IDS Board welcomes the Government’s endorsement and legal backing for the comprehensive package of undertakings and commitments we negotiated. 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 today 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.”
CWU general secretary Dave Ward 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.”
