The UK government has waved through the historic takeover of Royal Mail’s owner by the Czech billionaire Daniel Křetínský.
Here is what you need to know about the businessman and the takeover.
Who is Křetínský?
Křetínský, the son of a computing professor and a senior judge, studied political science and law in Brno, in the south-east of the Czech Republic, before joining an investment company called J&T Finance Group, a company co-founded by the businessman Patrik Tkáč.
Křetínský rose to become an equity partner in J&T, which then gave him a key role in the company’s 2009 spin-off of its coal and gas plants under the EPH name. That included a pipeline sending Russian gas to central and eastern Europe. Křetínský built up the EPH empire by buying fossil fuel assets that he saw as undervalued.
What other business interests does he have?
Using those earnings, Křetínský has bought a series of assets with more cultural cachet. They include stakes in the football clubs West Ham, in London, and Sparta Prague. He has bought stakes in several retailers including the US department store Macy’s and the trainer retailer Foot Locker, the German retailer turned wholesaler Metro, and a 10% stake in the FTSE 100 supermarket Sainsbury’s.
He has also collected several publishing titles. In France he holds financial interests in Le Monde and Libération, two daily newspapers, as well as the publisher of Elle magazine.
What does Křetínský want to do to Royal Mail?
Křetínský has not shown much of his hand so far. But in the one interview since agreeing the deal, he pledged to invest heavily in the rollout of delivery lockers to match other European countries. Lockers can benefit customers by making it easier to deliver and pick up packages out of hours, and also help the company by reducing the need for trips to individual addresses.
The other key strategic pledge he has made is to honour the universal service obligation, the law that ensures the same price for all letters within the UK. Křetínský said he would make an “absolutely clear, unconditional commitment” that Royal Mail will be the universal service provider for “as long as I’m alive”.
Will I still get a delivery every day?
But what constitutes a universal service is highly likely to change. Royal Mail is pushing to reduce deliveries of second-class letters to only two or three days a week, cutting almost 1,000 jobs and saving £300m a year in the process.
Křetínský has said he is supportive of Royal Mail’s proposals for the changes, which would mean that the speed of second-class letter delivery would depend on when it happened to be posted. First-class deliveries would remain from Monday to Saturday.
Will the price of stamps rise?
Křetínský has not given any public indication on what he will do with stamp prices, although for first-class letters he has the option to raise them.
However, the price of second-class stamps is regulated by Ofcom. In January 2024 it set the price of a second-class stamp from 1 April 2024 to 31 March 2027 at 85p, plus inflation-linked annual increases.
How did Royal Mail end up for sale?
From Henry VIII’s first appointment of a master of posts in 1516, through Charles I’s institution of the first public post in 1635, Royal Mail’s history was one of public ownership. That changed in 2013, when the Conservative-led coalition government privatised it.
Since then it has had a rough ride. The government was criticised for underpricing shares on the stock market, allowing investors to make a quick return. More recently it has been dominated by disputes with workers, which resulted in the departure of the chief executive, Simon Thompson. In January 2023 a ransomware hack added to its woes.
All of the turmoil has taken place against a backdrop of a company whose core business is changing. Parcel volumes have soared amid the online shopping boom, while letter volumes have halved since 2011 – although last week, Royal Mail was fined more than £10m by Ofcom for missing its delivery targets.
What can the new owners not do?
Royal Mail’s parent International Distribution Services on Monday published a long list of “undertakings” that will at least temporarily limit the scope for asset stripping – a concern for the government. Royal Mail will not be able to sell assets or pay out dividends, loans, or interest to companies controlled by its owners for five years unless it is judged to be “financially sustainable”. Asset sales must not threaten the universal service, again for five years.
The new owners will also have to stick to Royal Mail’s target of producing net zero carbon by 2040 (albeit only for five years) in a boost for electric van manufacturers. Royal Mail will not be allowed to transfer a £1bn pension surplus out of the business for at least five years, and the headquarters and tax residence will remain in the UK permanently.
Those pledges will be closely watched, after arguments over previous takeovers. In May 2010 the UK’s Takeover Panel censured the US food conglomerate Kraft for breaking the promise it made during the five-month battle to buy Cadbury to keep its Somerdale factory in Somerset open. The FTSE 100 buyout house Melrose also faced a battle over the closure of a factory after taking over GKN, although it strongly denied that the decision breached its undertakings.
