Royal Mail owner International Distribution Services (IDS) will be taken over after agreeing a £3.57 billion deal with Czech billionaire Daniel Kretinsky.
Mr Kretinsky’s EP Group vehicle, which already owns 27.6 per cent of the business, made a formal offer for the business after initial proposals earlier this month. The deal will see EP pay 370p per share to investors in IDS.
The deal will still need to be approved by shareholders at IDS’s next annual general meeting in September. The potential sale has attracted considerable scrutiny and could yet be blocked by the government under the National Security and Investment Act.
Business secretary Kemi Badenoch met IDS bosses earlier this month for talks on the deal, and underlined the need to protect services for the vulnerable, those in remote areas and small businesses.
IDS said the offer would see Royal Mail continue its universal service obligation to one-price-goes-anywhere first class post six days a week, and keep the company’s branding and UK headquarters.
It also said it would protect existing employment rights of all IDS staff, and that there is “no intention to make any material changes to overall headcount or reductions in the number of front-line workers” beyond existing plans.
The board said the offer reflects “the progress being made on change at Royal Mail, as well as the execution risks associated with delivering longer term value for shareholders in light of uncertainty over the nature and timing of universal service reform and the need for swift and significant strategic investments”.
The move to purchase IDS is just the latest investment by former lawyer Mr Kretinsky, known as the “Czech Sphinx”, who also has stakes in West Ham United and Sainsbury’s.
He said 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 bid comes at a crucial time for Royal Mail, which put forward plans to regulator Ofcom earlier this month to scrap second-class letter deliveries on Saturdays and cut the service to every other weekday as part of turnaround efforts.
Keith Williams, chairman of IDS, said: “IDS has the potential to become a leading international logistics player.
“Both the IDS board and EP 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.
“The IDS Board has negotiated a far-reaching package of legally binding undertakings and commitments which provide our customers, employees and broader stakeholders with important safeguards.”
Communication Workers Union general secretary Dave Ward said: “We do welcome some of the commitments that have been made but the reality is postal workers across the UK have lost all faith in the senior management of Royal Mail and the service has been deliberately run down.
“We will meet with EP Group next week and call for a complete reset in employee and industrial relations, the restoration of postal services and further commitments on the future of the company.
“We will also be directly engaging with the Labour Party and other stakeholders to call for a new model of ownership for Royal Mail where our members and customers have a direct say in key decisions and the creation of a golden share which will protect a key part of the UK’s communications infrastructure.”
Additional reporting by PA
