Advertisement The company has committed to maintaining the USO for as long as it owns Royal Mail.
This offset losses at Royal Mail, allowing IDS to report a small profit.
Earlier this year the takeover was called in for review under national security laws as Royal Mail is considered vital national infrastructure.
Last week, Royal Mail was fined £10.5m by the regulator Ofcom for failing to meet delivery targets for first and second class mail.
The price of a second-class stamp, which is currently 85p, is regulated by Ofcom, with the amount Royal Mail can increase it by each year tied to inflation.
Two hours earlier.
Edser Nick and Simon Jack.
the BBC News.
The government has approved the sale of Royal Mail’s parent company to a Czech billionaire.
Following the signing of “legally binding” undertakings, Daniel Kretinsky’s EP Group was granted permission to acquire the company for £3.06 billion.
The government will keep a “golden share” that will need to be approved for any significant changes to Royal Mail’s ownership, headquarters, and tax residency.
The Universal Service Obligation (USO), which requires EP Group to deliver letters six days a week, Monday through Saturday, and packages Monday through Friday, will also need to be upheld.
As long as it owns Royal Mail, the company has pledged to keep the USO in place. Mr. Kretinsky told the BBC earlier this year that he would honor the service “for as long as I am alive,” in whatever form it takes.
Royal Mail told regulator Ofcom that cutting second class deliveries to every other weekday would save up to £300 million annually and give the company “a fighting chance” as part of the ongoing review of the USO.
The regulator stated in September that it was considering these modifications and that a decision was anticipated the following year.
Dame Melanie Dawes, the chief executive of Ofcom, told the BBC that there were “real questions about what the service needs to be going into the future.”.
Since the number of letters is declining, “we have to think about what is economical,” and Ofcom will be releasing plans for the upcoming year “to make sure it is sustainable.”.
Early next year is when the acquisition of International Distribution Services (IDS), the parent company of Royal Mail, is anticipated to be finalized. When debts are taken into account, the deal values the business at £5.03 billion.
Although the deal was subject to shareholder approval, Business Secretary Jonathan Reynolds stated that the government’s agreement meant the takeover “will be a good deal for the UK, be a good deal for the people who work for Royal Mail, and a good deal for customers.”.
According to Mr. Kretinsky, the discussions with the government had “led to unprecedented undertakings and commitments.”.
The “mission of EP Group is to make Royal Mail a successful modern postal operator with high quality service and products for its customers,” he continued.
As per the agreement reached by EP Group, Royal Mail’s headquarters and tax residency will remain in the United Kingdom for the next five years, along with the brand name.
In order to give workers a greater say in how Royal Mail is run, it has also reached a principled agreement with unions that calls for the creation of a workers group that will meet monthly with the company’s directors and gives workers a 10% share of any dividends paid to Mr. Kretinsky.
CWU union general secretary Dave Ward told the BBC that the deal was the “best opportunity” to save Royal Mail’s future and that it was an “extensive agreement.”.
He did, however, add that there was “a long way to go” before USO reform was implemented and that the union had “not agreed anything” on it.
GLS, IDS’s very successful European parcel delivery company, generated over £300 million in revenue last year. IDS was able to report a slight profit as a result of this offsetting Royal Mail’s losses.
By introducing GLS parcel expertise to the UK market and investing in out-of-home delivery lockers, Mr. Kretinsky intends to establish a logistics company that operates throughout Europe.
It is anticipated that this will allow Royal Mail to regain market share that it has lost in recent years in the lucrative and expanding parcel industry.
The Sunday Times Rich List states that Mr. Kretinsky is worth £6 billion.
Apart from owning ten percent of Sainsbury’s and twenty-seven percent of West Ham United, Mr. Kretinsky’s companies also own a gas transmission service that continues to send much lower amounts of Russian gas to Europe with EU approval and payment.
Because Royal Mail is regarded as essential national infrastructure, the takeover was subject to a review earlier this year under national security laws.
However, Reynolds had described Mr. Kretinsky as a “legitimate business figure” in front of MPs in November, whose purported ties to Russia had already been examined and rejected when he took over as the company’s largest shareholder almost two years prior.
Following its privatization and separation from the Post Office ten years ago, Royal Mail has experienced a decline in performance in recent years, resulting in significant financial losses.
In the United Kingdom, the amount of letters being sent has drastically decreased, with half as many being sent as in 2011.
The regulator Ofcom fined Royal Mail £10 million last week for not meeting first and second class mail delivery targets.
Royal Mail will “absolutely” be held accountable by Ofcom, Dame Melanie Dawes told the BBC, adding that it was up to the new ownership to make improvements.
Although Royal Mail was investing to boost performance, Jenny Hall, director of corporate affairs, told the BBC that it was “really important” that the USO be changed to take consumer trends into account.
“Prices do need to reflect the realities of delivering the service,” she continued, adding that Royal Mail would always strive to keep postage costs as low as possible.
Ofcom regulates the price of a second-class stamp, which is currently 85p. Royal Mail is allowed to raise the price annually in accordance with inflation.
First-class stamps, on the other hand, are not subject to such restrictions. In October, Royal Mail raised the price of first-class mail by 30p to £1.65, citing “very real and urgent” financial difficulties.
