The Government has approved the takeover of Royal Mail by Czech billionaire Daniel Kretinsky, marking the first time the postal service will be in foreign ownership
Royal Mail was spun out from the Post Office and privatised just over a decade ago (Image: PA Archive/PA Images)
Royal Mail is on the brink of foreign ownership for the first time in its historic 500-plus year history, following approval from the Government for a takeover by Czech tycoon Daniel Kretinsky.
Business Secretary Jonathan Reynolds has announced that the Government has agreed several legally-binding commitments with Mr Kretinsky's Vesa Equity Investment over the £3.6bn acquisition of Royal Mail's parent company International Distribution Services (IDS).
Here we look at the key questions surrounding the deal and the commitments made to the Government.
Who is Daniel Kretinsky?
Daniel Kretinsky, otherwise dubbed as the "Czech sphinx" is a billionaire with a number of British investments including interests in West Ham United football club and the supermarket chain, Sainsbury's. He holds a 27% stake in IDS.
How can the UK's postal delivery service be taken over by an overseas buyer?
A decade ago, Royal Mail was disentangled from the Post Office and embraced privatisation. October 2013 marked its debut on the London stock exchange, with the Government initially retaining a stake but subsequently offloading its final shares in 2015.
The firm turned a new page, rebranding from Royal Mail Group to International Distribution Services in October last year. Its status as a listed entity means it's fair game for acquisition moves, much like any other business strutting its stuff on the London exchange.
What's the rationale behind the Government having to greenlight this deal?
The Government had to scrutinise the deal involving Royal Mail due to national security considerations, as it forms a crucial part of the UK's infrastructure. Given its powers under The National Security and Investment Act, the Government can check over and possibly interfere with business takeovers that might raise national security issues.
What are the major pledges made in the accord with the Government?
Mr Kretinsky has given his word to preserve the Royal Mail name and ensure its headquarters and tax domicile remain in Britain for at least the following five years. Furthermore, he's promised to uphold the firm's universal service obligations this mandates by law that Royal Mail must provide nationwide letter delivery six days a week at standard stamp cost.
Another pivotal element of the deal is a "golden share" retained by the Government in Royal Mail, which requires its consent before any significant alterations to ownership, head office location or tax residency take place. Prior assurances from Mr Kretinsky also involve a vow not to raid the pension surplus.
What does this mean for workers?
EP Group has struck a deal affirming its commitment to recognise and enter discussions with the trade unions that represent Royal Mail's on-the-ground workforce and their bosses, namely the Communication Workers Union (CWE) and Unite.
To date, there's an understanding that staff will benefit from a 10% share of dividends distributed to Mr Kretinsky, while also establishing a worker committee that will engage in monthly dialogues with company executives. EP Group has committed to stave off any forced redundancies until 2025, but it's believed that unions have been in discussions to get this assurance extended. So what's the next step?
What happens now?
The acquisition is scheduled for completion early next year, yet it hinges on the shareholders' vote and their subsequent endorsement.
Commenting on the potential outcomes, Russ Mould of AJ Bell cautioned: "There is no certainty that it will sail through. "However, it feels as if any opposing shareholders would have already expressed their dissatisfaction by now.
"There are no alternative bids on the table and this is proving to be one of the most complicated takeovers in years, which suggests shareholders might be ready to take the money and move on."