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Royal Mail’s potential takeover: An overview
Czech billionaire Daniel Kretinsky has made a £3.6 billion offer for Royal Mail, which has been accepted by the board. The deal requires shareholder approval on 25 September and government scrutiny under the National Security and Investment Act. Business Secretary, Jonathan Reynolds, has called for constructive work with unions and will scrutinise the assurances and guarantees given.
Commitment to universal service
Kretinsky has committed to maintaining the Universal Service Obligation (USO) of delivering letters six days a week throughout the UK, stating he would honor this “as long as I’m alive.” This commitment addresses concerns about potential reductions in service frequency.
Employee relations and union demands
The Communication Workers Union (CWU) is pushing for employee part-ownership and board representation, threatening potential strikes if their demands aren’t met. While Kretinsky is open to profit-sharing with employees, he rejects the idea of employee ownership stakes, citing potential complications.
Job security and future plans
Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions until 2025. However, concerns exist about potential job losses and changes to workers’ contracts after this period. Kretinsky maintains that job cuts are not part of his plan, suggesting that success could lead to more hiring.
Company structure and financial considerations
Addressing concerns about the potential break-up of the business, Kretinsky promised not to split off GLS (Royal Mail’s profitable German and Canadian logistics business) or overburden the company with debt. This commitment aims to maintain the integrated structure of the company.
Challenges ahead
The deal faces significant challenges in satisfying both government and union concerns before it can proceed. Kretinsky’s ability to navigate these complex stakeholder relationships will be crucial to the success of the takeover bid.
IDS (Royal Mail) share price – technical analysis
The share price rocketed in the wake of the takeover bid, and while it dropped back in the second half of June it has since recovered most of its losses.
For the moment, the bid remains accepted, though shareholders have until 25 September to vote on the proposal. This is likely to go through, though the government must also give its approval. Until further news is heard on this, the share price is likely to hold steady.
IDS share price chart
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