Green light for Royal Mail takeover

The government has approved the takeover of Royal Mail by Czech billionaire Daniel Křetínský, which will move parent company International Distribution Services (IDS) off the London Stock Exchange and into foreign ownership. 

The Department for Business and Trade has received legally binding commitments from Křetínský that are “intended to secure the long-term, sustainable future of Royal Mail”. These include giving the government a 'golden share', which should ensure that Royal Mail cannot move abroad or change where it pays its taxes without UK government approval. 

There will also be no change of control at the company for at least three years, and Royal Mail will remain the UK’s universal service provider under Křetínský. 

Business secretary Jonathan Reynolds said the agreement was “yet another example of this government’s commitment to working hand in hand with business to generate reform”.

In another important milestone, Křetínský has secured an agreement in principle with two key unions after “challenging negotiations”. These agreements remain subject to internal approvals with the Communication Workers Union, Communication Managers Association and Unite. 

In May, EP Group – the European industrial giant controlled by Křetínský – offered to pay 370p per IDS share, consisting of 360p per share in cash, a final dividend and a special dividend that will only be paid if the deal becomes unconditional. This values the company at £3.5bn, or £5.3bn including debt, and represents a 73 per cent premium to IDS’s pre-offer closing price.

Royal Mail is plagued by financial and operational issues. Last financial year, Royal Mail recorded an adjusted loss of £348mn. Meanwhile, just last week regulator Ofcom fined it £10.5mn for poor delivery performance. This followed a £5.6mn fine in November 2023.