The UK government has taken a significant step by approving the £3.6 billion takeover of Royal Mail's parent company, International Distribution Services, by Czech billionaire Daniel Kretinsky. This decision marks the first time the historically state-owned postal service will fall under foreign ownership, raising eyebrows and hopes alike about the future of one of the country’s oldest institutions.
According to reports, the announcement of this agreement is expected to be made public on Monday. The government will hold onto what is termed a "golden share"—a special veto power—that allows it to approve any major changes related to Royal Mail’s ownership structure, headquarters location, and tax residency. This safeguard reflects the government's acknowledgment of the postal service as a key national asset.
Kretinsky, who is the head of the EP Group, is widely reported to have made several concessions to secure this approval. Among these concessions is the arrangement for Royal Mail workers to receive 10% of any dividends paid out by Kretinsky. "Mr Kretinsky is believed to have made several concessions to gain approval, including allowing workers to get a 10% share of any dividends paid out to him," revealed the BBC.
Notably, Kretinsky also guaranteed not to exploit the pension surplus, assuring the public and stakeholders of his commitment to maintaining the Universal Service Obligation (USO). This USO mandates the delivery of letters six days per week. He plans to keep the Royal Mail brand intact and to maintain its headquarters and tax residency within the UK for at least the next five years.
Despite these promises, Royal Mail has recently faced serious challenges, including financial losses and criticism over its delivery performance. Just last week, the company was fined £10.5 million by Ofcom for failing to meet its delivery targets, which has exacerbated public trust issues. The regulator pointed out, "Royal Mail’s poor service is now eroding public trust…" said Ian Strawhorne, Ofcom director of enforcement. With reports of as many as 25% of first-class deliveries arriving late, Kretinsky’s commitment to improvements will be closely monitored.
Reflecting on his ambitions for Royal Mail, Kretinsky announced plans to invest heavily to improve delivery efficiencies through means such as the rollout of delivery lockers. "I intend to invest heavily... to make online deliveries more efficient," he told the BBC. Given the backdrop of dwindling letter volumes and increased demand for parcel services, such investments signal Kretinsky's focus on adapting the service to modern demands.
The sale's approval follows years of tumult for Royal Mail. It was privatized nearly a decade ago and has since struggled with repetitive labor strikes, losses of market share, and customer dissatisfaction. With the advent of digital communication replacing traditional mail, the company’s letters volume has halved compared to figures from 2011. Meanwhile, its profits lean heavily on the parcel delivery sector, demonstrating the urgent need for adaptability.
Union leaders have reportedly met with Kretinsky’s team to negotiate these commitments and are now proceeding to finalize the agreement through internal democratic processes. Royal Mail, which has prided itself on being one of the UK’s most recognized institutions, is now at the crossroads, facing both the risks and opportunities posed by this takeover.
There’s no denying the shift this acquisition brings to the table. Why would such investment by Kretinsky—a figure with substantial interests ranging from energy to football—be significant? It highlights the increasing intersection of global capital and local infrastructure, raising discussions around foreign influence over public services. Observers and stakeholders alike will be watching closely to see how Kretinsky implements his plans and whether he can truly turn around the fortunes of Royal Mail.
