Royal Mail will have a new ultimate owner in Czech billionaire Daniel Křetínský after a £3.5 billion deal was announced on Wednesday.
The takeover of International Distribution Services (IDS), the parent firm of Royal Mail, was completed this week after the conclusion of discussions that began in April. The IDS board had said it was “minded to” accept a bid at the price agreed on Wednesday, which is 370p per share.
Keith Williams, the chairman of IDS, said: "IDS has the potential to become a leading international logistics player.
“Both the IDS Board and EP (Mr Křetínský’s company) are acutely aware of their responsibilities to IDS and particularly to the unique heritage of Royal Mail and its obligations as the designated universal service provider of postal services in the UK.”
Here is what it all means…
Who owns Royal Mail?
Formerly a publicly owned company, Royal Mail was privatised in 2013. In October 2013, 60 per cent of its shares were floated on the London Stock Exchange. The sales of the remaining shares started in June 2015 and the final sale was completed in October 2015. Royal Mail is now a public limited company, meaning it is owned by shareholders. It trades on the FTSE 250 as RMG.
The privatisation was intended to ensure the service’s long-term sustainability but the business has suffered numerous strikes and in the year to May 2023 made an operating loss of £1 billion.
Who is Daniel Křetínský and who are EP?
Before the takeover, the biggest shareholder had been Mr Křetínský, who controls the group Vesa Equity Investment and is chief executive of energy firm EPH.
On May 29 he was able to reach a deal for his EP Group to take over International Distribution Services, the parent company of the Post Office.
The 48-year-old Mr Křetínský has been dubbed the Czech Sphinx, due to his enigmatic business approach. He also has stakes in Sainsbury’s and West Ham United.
What does this announcement mean for Royal Mail?
EP Group has agreed on certain undertakings with the UK Government, including that the business will remain the country’s universal service provider for the next five years.
It will continue to deliver everywhere in the country for both its first and second-class services, and offer first-class post six days a week. However, there was no mention of guarantees beyond that, suggesting that second-class deliveries may be delivered less often.
IDS had previously suggested a two or three days a week second class service, alongside six days a week of first-class deliveries. That suggestion is still more regular than some of Ofcom’s proposals, which included cutting the number of delivery days to just three even for first-class post.
Mr Křetínský said: “IDS, and Royal Mail in particular, form part of the national infrastructure of the countries they operate in.
“More than that, Royal Mail is part of the fabric of UK society and has been for hundreds of years. The EP group has the utmost respect for Royal Mail's history and tradition, and I know that owning this business will come with enormous responsibility – not just to the employees but to the citizens who rely on its services every day.
“The scale of the commitments we are offering to the company and the UK Government reflect how seriously we take this responsibility, to the benefit of IDS' employees, union representatives and all other stakeholders.”
