EP Group secures Royal Mail with UK government deal

The UK government has reached an agreement with Daniel Kretinsky's EP Group, allowing the Czech billionaire's industrial conglomerate to proceed with the acquisition of International Distribution Services (IDS), the parent company of Royal Mail (LON:IDSI ).

The deal, valued at 3.57 billion pounds ($4.50 billion), ensures that the iconic British postal service will continue to operate from within the U.K.

The agreement between EP Group, the U.K. government, and labor unions includes several protective measures for Royal Mail's services and its workforce. These measures were crucial in overcoming obstacles to the acquisition, which was initially agreed upon in May.

The completion of this deal marks the end of British ownership for the postal service, which is credited with creating the first adhesive postage stamp.

Royal Mail, a service with a history spanning over 500 years, has faced challenges in recent times due to declining letter volumes and increased competition from newer delivery companies. The British government privatized Royal Mail roughly ten years ago, listed it on the London Stock Exchange (LON:LSEG ), and renamed it IDS.

The terms of the deal with EP Group include the retention of a "golden share" by the government, which provides the authority to block any attempts to relocate Royal Mail's headquarters or tax residency out of the country.

EP Group has committed to maintaining Royal Mail as the universal service provider in the U.K. and has agreed not to alter the control of Royal Mail or its delivery business, GLS, for a minimum of three years after the acquisition is finalized. The group has also vowed to adhere to existing regulatory conditions and to maintain the current corporate structure.

Furthermore, EP Group has promised to recognize and engage in negotiations with the unions representing Royal Mail's workers. These unions include the Communication Workers Union (CWU) and CMA Unite, which represent the frontline and managerial employees, respectively.

The CWU highlighted that the agreement includes job security commitments and other legally binding assurances regarding Royal Mail's future.

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Source: Investing.com