Notice: UK Government Approves Daniel Křetínský's Historic Takeover of Royal Mail Owner IDS

On 16 December 2024, the UK government approved the historic takeover of Royal Mail's parent company, International Distribution Services (IDS), by the Czech billionaire Daniel Křetínský. The approval, reported by The Guardian, ended months of political scrutiny over the future of Britain's most recognisable postal brand and came with a long list of undertakings designed to limit asset stripping and protect public-interest commitments.

The conditions attached to the deal

Alongside the approval, the parent company published an extensive set of undertakings restricting what the new owners can do in the first five years:

• Royal Mail will not be able to sell assets in a way that threatens the universal postal service for five years.
• For five years it will not be able to pay dividends, loans or interest to companies controlled by its owners unless that is judged to be financially sustainable.
• The £1bn pension surplus cannot be transferred out of the business for at least five years.
• The new owners must stick to Royal Mail's target of reaching net zero carbon by 2040, a requirement that applies over the five-year period.
• Royal Mail's headquarters and tax residence will remain in the UK permanently.

Delivery changes and the universal service

The takeover lands as Royal Mail pushes to reduce deliveries of second-class letters to only two or three days a week. Under that plan, the speed of second-class delivery would depend on when an item is posted, while first-class deliveries would remain from Monday to Saturday. The company estimates the change would cut almost 1,000 jobs and save £300m a year, and Křetínský has said he supports the proposals. On stamp prices he has not publicly indicated his intentions: for first-class letters he has the option to raise prices, while the price of second-class stamps is regulated by Ofcom, which in January 2024 set it at 85p for the period from 1 April 2024 to 31 March 2027, plus inflation-linked annual increases.

Křetínský pledged to honour the universal service obligation — the law ensuring the same price for all letters within the UK — saying he would make an "absolutely clear, unconditional commitment" that Royal Mail will be the universal service provider "for as long as I'm alive". In his only interview since agreeing the deal, he also promised heavy investment in the rollout of delivery lockers to match other European countries: lockers make it easier for customers to send and collect packages outside normal delivery hours and reduce Royal Mail's need for trips to individual addresses.

Who is Daniel Křetínský

Křetínský, who rarely gives interviews, is the son of a computing professor and a senior judge. He studied political science and law in Brno, in the south-east of the Czech Republic, and joined the investment company J&T Finance Group, co-founded by businessman Patrik Tkáč, where he rose to become an equity partner. He was given a key role in the 2009 spin-off of coal and gas plants under the EPH name, a business that included a pipeline sending Russian gas to central and eastern Europe, and he built up the EPH empire by buying fossil fuel assets he viewed as undervalued. His other holdings include stakes in the football clubs West Ham and Sparta Prague, the US department store Macy's, trainer retailer Foot Locker, the German retailer turned wholesaler Metro, and a 10% stake in the FTSE 100 supermarket Sainsbury's. In France he holds financial interests in the newspapers Le Monde and Libération and in the publisher of Elle magazine.

A postal business in transition

The deal closes on a company whose core business is changing: parcel volumes have soared thanks to online shopping, while letter volumes have halved since 2011. Royal Mail's long history reaches back to 1516, when Henry VIII appointed a master of posts, and to 1635, when Charles I instituted the first public post. The company was privatised in 2013 by the Conservative-led coalition government, a sale criticised for underpricing the shares and allowing investors to make a quick return. More recently it was dominated by disputes with workers that led to the departure of chief executive Simon Thompson, and in January 2023 it suffered a ransomware hack. Shortly before the approval, Ofcom fined Royal Mail more than £10m for missing delivery targets.

Křetínský's pledges are expected to be watched closely because of previous takeover controversies. In May 2010, the UK Takeover Panel censured Kraft for breaking a promise made during its takeover battle for Cadbury to keep the Somerdale factory in Somerset open, and buyout firm Melrose faced controversy over a factory closure after taking over GKN, though it denied breaching its undertakings.

Company details: International Distribution Services (IDS), owner of Royal Mail. Official website royalmail.com.