Britain clinches the terms of the deal to sell 500-year-old Royal Mail to a Czech billionaire
By Anna Cooban, CNN
London (CNN) — Royal Mail, which dates back to the reign of Henry VIII in the 1500s, is set to be sold to a Czech billionaire in a deal that will keep the institution based in Britain.
Daniel Křetínský’s EP Group has made “legally binding commitments” to the UK government as part of the process to buy the postal service from its British parent company International Distribution Services, according to a government statement published Monday.
These commitments include seeking government approval to move Royal Mail’s headquarters and tax residency abroad, with both remaining in the United Kingdom for at least five years.
EP Group must also uphold the postal service’s “universal service obligation,” which requires it to deliver priority letters six days a week everywhere in the UK for the same flat fee. The company has also agreed to recognize and “negotiate in good faith” with relevant workers’ unions.
The £3.6 billion ($4.6 billion) deal, which International Distribution Services accepted in May, has raised concerns about the fate of thousands of Royal Mail employees, as well as the future of a key piece of national infrastructure, which delivers a vital public service.
The commitments given to the government by EP Group “secure Royal Mail’s identity as an iconic British institution whilst also allowing it to operate as a fully private company without day-to-day government interference,” the Department for Business and Trade said in its statement.
The sale comes after a difficult few years for Royal Mail, which was privatized in 2013. The company has suffered a sharp drop in demand for its services, and its losses have ballooned. Appeals to the government to be released from its obligation to deliver priority letters six days a week have fallen on deaf ears.
Last week, Ofcom, the UK regulator overseeing the postal service, fined Royal Mail £10.5 million ($13.3 million) for failing to meet its delivery targets.
“With millions of letters arriving late, far too many people aren’t getting what they pay for when they buy a stamp,” Ian Strawhorne, Ofcom’s director of enforcement, said in a statement. “Royal Mail’s poor service is now eroding public trust in one of the UK’s oldest institutions.”
Who is Křetínský?
Křetínský, the majority shareholder of EP Group, oversees a sprawling empire of European energy companies, retailers and football clubs. He is worth an estimated $7 billion, according to the Bloomberg Billionaires Index.
The magnate began his career as a lawyer, according to EP Group’s website. He has also worked at J&T, a European financial firm, where he became a partner in 2003.
Křetínský founded EP Group in 2016 with business partner Patrik Tkáč. Through its investment arm Vesa Equity Investment, Křetínský has acquired stakes in big-name brands such as Foot Locker (FL) in the United States, FNAC in France and supermarket Sainsbury’s in the UK.
Some fans of British soccer are already familiar with the relatively low-profile billionaire.
Three years ago, the businessman bought a 27% stake in West Ham United Football Club through another of his investment firms. That makes Křetínský the club’s second-biggest shareholder, according to its website.
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