The UK government has announced (December 16) an agreement with EP Group, owned by entrepreneur Daniel Křetínský, for the £5.3bn (US$6.7bn) sale of Royal Mail owner International Distribution Services (IDS).
According to a statement on the government’s website, Business Secretary Jonathan Reynolds has received legally binding commitments from Křetínský that are intended to secure the long-term, sustainable future of Royal Mail whilst protecting crucial services for millions of customers across the UK.
Commenting on the deal, Reynolds said, “For too many years progress on securing a stable future at Royal Mail has stalled, but from day one we have been committed to providing a secure future for thousands of workers and customers.
“Today’s agreement is yet another example of this government’s commitment to working hand in hand with business to generate reform and give respite to people right across the UK, as we are working toward ensuring a financially stable Royal Mail with protected links between communities other providers can’t reach.
“I’d like to thank EP Group and Daniel Křetínský for their constructive approach to our discussions and their commitment to protecting this national icon. I look forward to working with them to fix the foundations and ensure Royal Mail continues to deliver for the communities and businesses who rely on it most.”
National institution
The sale of IDS, which was announced back in May, is aimed at bringing Royal Mail back to profitability and overcoming the challenges associated with providing the Universal Service Obligation to all UK residents.
Recognizing the importance of Royal Mail as an iconic national institution, the government said it had negotiated a ‘Golden Share’ to ensure that, with very limited exception, the headquarters of Royal Mail cannot be moved abroad and that Royal Mail cannot change where it pays its taxes – in either case – without UK government approval.
“These restrictions will apply to any future owners of Royal Mail and, alongside other commitments to the brand and cypher, 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 UK government stated.
EP Group has also committed to honoring any new agreements entered into with the postal unions, recognizing that workers should be placed at the heart of a sustainable Royal Mail.
After months of constructive engagement, these legally binding commitments were voluntarily offered by EP Group in recognition of the significant contribution that Royal Mail makes to Britain’s national identity and the importance that it has in everyday life in the UK.
Křetínský confirmed, “EP Group is very pleased to have reached this historic agreement with the Business Secretary to safeguard the future of Royal Mail, under EP Group ownership.
“We would like to thank the Business Secretary for the constructive negotiations that have resulted in unprecedented commitments and undertakings that demonstrate the high regard EP Group has for Royal Mail as an institution, the service it provides to millions of UK homes and businesses, and Royal Mail employees.
“EP Group is a long-term and committed investor with a mission to make Royal Mail a successful modern postal operator with high-quality service and products for its customers. We look forward to delivering on this mission alongside our partners in government.”
IDS welcomes news
Commenting on the announcement, Keith Williams, non-executive chair of IDS, enthused, “Today’s announcement marks an important milestone in the approvals process. The IDS board welcomes the government’s endorsement and legal backing for the comprehensive package of undertakings and commitments we negotiated. These provide our customers, colleagues, unions, regulators and broader stakeholders with safeguards for the provision of the Universal Service Obligation, the ongoing financial stability of Royal Mail, the maintenance of colleague benefits and Royal Mail’s broader role in the United Kingdom.
“We welcome the wovernment’s commitment today to secure a stable future for Royal Mail. This will not come from a change in ownership alone but must also be backed by urgent reform of the Universal Service and the continued transformation of this great British business.”
Union support
The Communication Workers Union also welcomed the news today, with general secretary Dave Ward stating, “We are pleased to have reached a negotiators settlement with EP Group covering crucial areas such as job security, the governance of the company, a meaningful stake in the business for employees, restoring quality of service, legally binding commitments and improving the terms and conditions of our members.
“This agreement provides the foundation to rebuild Royal Mail. These have been challenging negotiations but through the support of our members we have delivered what by any measure is a groundbreaking agreement which puts postal workers and customers back at heart of everything Royal Mail does.”
For more detail on the deal, visit: https://www.gov.uk/government/news/royal-mail-remains-based-in-uk-in-deal-to-bolster-key-services.