Royal Mail is “part of the fabric of UK society and has been for hundreds of years,” Kretinsky said in a statement on Wednesday. “I know that owning this business will come with enormous responsibility.”
The deal, coming just days after a general election was called, is likely to be opposed by some UK politicians who have previously voiced their concern about Kretinsky already owning a large chunk of the former state-owned company. His stake is currently more than 27 per cent.
The opposition Labour Party, which is the favourite to win the July 4 election, has said it will examine the deal, which has an enterprise value of £5.3 billion.
“Royal Mail is as British as it gets, and Labour will take the necessary steps to safeguard its undeniable identity and place in public life,” said the party’s shadow business secretary, Jonathan Reynolds, earlier this month.
The company has accepted the offer while calling on the government and regulators to relax strict rules around letter deliveries. Royal Mail has asked UK regulators to swiftly cut back its legal obligation to deliver letters across Britain six days a week, in an effort to fend off Kretinsky. The regulator is considering reforms.
Parcels
Royal Mail is grappling with a decline in letter-writing and the rise in parcel deliveries due to e-commerce. Members of the Communication Workers Union (CWU) voted to accept a new pay deal last year after months of strikes, during which it accused management of prioritising parcels over letters.
The CWU, Royal Mail’s largest union, said it would meet with EP Group next week to seek a re-set 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,” it said.
Former state monopoly Royal Mail was privatised in 2013 and has since seen its core letters business ravaged as consumers increasingly communicate online, which has conversely helped its international parcels business, GLS.
Britain’s communications regulator Ofcom has proposed that Royal Mail cut delivery to five days, or even three days per week, potentially saving the company hundreds of millions of pounds.
Kretinsky also committed to not breaking up the group for at least three years, keeping the Royal Mail brand, and maintaining IDS and Royal Mail headquarters in the UK. He will also continue to recognise the unions.
“We remain to be convinced that this will be sufficient to secure support for whichever government gets to make the decision,” said Liberum analyst Gerald Khoo in a note.
Kretinsky’s EP group said Royal Mail and logistics business GLS require further investment, particularly in parcel lockers and out-of-home solutions, and said they “would be better placed to obtain and structure such investment as a private company.”
The Czech investor has slowly built up his IDS stake over the last few years, along with other investments across Europe, as he diversifies away from energy. In the UK, he also has stakes in grocer J Sainsbury and Premier League football club West Ham United.
Additional reporting by Agence France-Presse, Reuters