Czech billionaire Daniel Kretinsky is on the verge of finalizing a deal to acquire Royal Mail through his investment vehicle, EP Group. Sources close to the negotiations suggest the transaction could be confirmed within the next two weeks. The proposed takeover has been backed by the board of Royal Mail’s parent company, International Distribution Services (IDS), with a £3.6 billion offer price recommended to shareholders.
Daniel Kretinsky, already a major shareholder in the company, has made significant concessions to secure the deal. These include commitments to maintaining the “one price goes anywhere” universal service, safeguarding the pension surplus, and preserving the Royal Mail brand’s UK headquarters and tax residency for at least five years. Furthermore, he has pledged to honor union demands for no compulsory redundancies until 2025, with negotiations underway to potentially extend these assurances.
The Communication Workers Union (CWU) has described its meetings with EP Group as “honest and constructive,” though some union members remain cautious about the potential impact of the takeover. The National Security and Investment Act will also require the deal to undergo government approval, but officials are reportedly satisfied with Daniel Kretinsky’s suitability as a prospective owner, dismissing past concerns about alleged links to Russia. Business Secretary Jonathan Reynolds has characterized him as a “legitimate business figure” with no security concerns tied to his involvement in Royal Mail.
Royal Mail, privatized a decade ago, faces significant challenges. The company’s universal service obligation mandates the delivery of letters six days a week and parcels five days a week, a service criticized for frequent delays in recent years. Complaints have surged over missed medical appointments and delayed legal documents, while letter volumes have halved compared to 2011. Despite growing profitability in parcel deliveries, Royal Mail has struggled with substantial financial losses. Last year, parent company IDS managed a modest profit entirely generated by its German and Canadian logistics businesses.
Amid this turmoil, Royal Mail has proposed reforms to the regulator, Ofcom, suggesting a reduction in second-class deliveries to alternate weekdays, potentially saving £300 million annually. Daniel Kretinsky has publicly committed to upholding the universal service obligation, stating earlier this year that he would ensure its continuity “as long as I am alive.” However, he supports the company’s reform proposals as essential for its survival.
The deal represents a pivotal moment for Royal Mail as it navigates financial recovery and operational reforms under new ownership.
