Royal Mail takeover approved by Czech billionaire

The sale of Royal Mail’s parent company to a Czech billionaire has been approved by the government.

The BBC believes the £3.6bn takeover by Daniel Kratinsky’s EP Group will be announced on Monday morning.

The government will retain a so-called “golden share” which it would need to approve any major changes to Royal Mail’s ownership, headquarters location and tax residence.

Other commitments to the unions included workers getting a 10% share of any dividends paid to Kratinsky, as well as the formation of a workers’ group that would meet monthly with Royal Mail’s directors to advise workers on how to run it. But a bigger voice can be given.

Mr. Kratinsky had already offered the following guarantees to secure the deal:

• Maintaining Universal Service Obligation (USO) one-price-anywhere, which means it must deliver parcels six days per week, Monday to Saturday, and Monday to Friday.

• No to raiding pension surplus

• To keep the brand name and Royal Mail headquarters and tax residency in the UK for the next five years

• Respecting the union’s demand for no compulsory redundancies (until 2025)

The entrepreneur told the BBC earlier this year that he would honor the USO – in whatever form – “as long as I live”.

The USO is currently under review, with Royal Mail suggesting to regulator Ofcom that reducing second class deliveries to every other weekday would save up to £300m a year and give the business a “fighting chance”.

In addition to owning 27% of West Ham United football club and 10% of Sainsbury’s, Mr Kratinsky’s companies also own a gas transmission service that still pipes very low levels of Russian gas to Europe, paying for it. Done and with the consent of the European Union.

The acquisition was called for review national security law because it is considered critical national infrastructure.

Speaking before MPs in November, Trade Secretary Jonathan Reynolds referred to Mr Kratinsky as a “legitimate business man” whose alleged ties to Russia had already been reviewed and he was then sacked. When he became the largest shareholder in the company about two years ago.

Unions met with Kratinsky’s EP group over the weekend to hammer out additional commitments and have agreed the package in principle but said it needs to be put through an “internal democratic process”.

Royal Mail, which was separated from the Post Office and privatized a decade ago, has seen its performance decline in recent years, leading to huge financial losses.

Customers have also complained about delivery, with important medical appointments and legal documents not being delivered on time.

last week, Royal Mail fined £10.5m by regulator Ofcom for failing to meet delivery targets for first and second class mail.

Ofcom said Royal Mail’s poor service was “now eroding public confidence in one of Britain’s oldest institutions”.

Royal Mail owner International Distribution Services (IDS) said it had made “substantial” reforms this year to try to improve externally.

The volume of letters posted in the UK has decreased, with the number of letters sent halving compared to 2011 levels.

Meanwhile, parcel delivery has become more popular – and more profitable, too.

Parent company IDS made a small profit last year that was generated entirely from its German and Canadian logistics and parcels business, which offset Royal Mail’s losses.

Mr Kratsinky told the BBC he intended to invest heavily in the roll out of delivery lockers to make online deliveries more efficient as has happened across Europe.

Daniel Kratinsky began his career as a lawyer in his hometown Brno, before moving to Prague.

He then made serious money in Central and Eastern European energy interests.

This includes Ustream, which transports Russian gas through pipelines passing through Ukraine, the Czech Republic and Slovakia.

He then diversified into other investments, including an approximately 10% stake in UK supermarket chain Sainsbury’s and a 27% stake in Premier League club West Ham United.

According to reports, the Czech businessman is worth around £6bn.