Badenoch says proposed sale of Royal Mail to foreign owner must protect service

Royal Mail’s owner International Distribution Services (IDS) is “minded” to agree a takeover by shareholder Daniel Kretinsky, after the Czech billionaire put forward a bid worth about £3.5 billion.

Ms Badenoch met IDS bosses for talks on the proposed sale and underlined the need to protect services for the vulnerable, those in remote areas and small businesses.

IDS said Mr Kretinsky, whose EP Group owns a 27.5% stake in the firm, had agreed to offer a set of “contractual undertakings” to protect key public interest factors recognising Royal Mail’s status as a major part of national infrastructure under the proposal.

This would include commitments to Royal Mail’s plans to keep six-day-a-week first class letter deliveries under the universal service, protect workers’ rights and keep the Royal Mail brand, as well as its UK headquarters and tax residence.

EP Group would also continue the one-price-goes-anywhere service for letter post inside the UK, it said.

IDS said it was minded to agree to a deal on the terms and price in the proposal, should a firm bid be made.

Ms Badenoch welcomed the headline details of the undertakings in talks with IDS chief executive Margin Seidenberg and chairman Keith Williams.

She is understood to have emphasised the importance of the Royal Mail in British society and welcomed a commitment for the firm to remain based in the UK and preserve the universal service – but said the details would ultimately be for the  Government to consider and agree.

Those at the meeting agreed it would be good for Ms Badenoch to meet Mr Kretinsky or his representatives to set out her expectations for Royal Mail.

Mr Kretinsky has until 5pm on May 29 to make a firm offer after the City Takeover Panel agreed to extend the so-called “put up or shut up” deadline, which was originally set for 5pm on Wednesday May 15.

Mr Kretinsky, who is said to be known as the “Czech Sphinx”, already has a raft of investments, including stakes in London football club West Ham United and supermarket giant Sainsbury’s.

The Communication Workers Union (CWU) said the “future of postal services in the UK is again under threat”.

CWU general secretary Dave Ward said: “EP Group must immediately demonstrate an up-front and open commitment to working with the union to completely change the culture in workplaces across the UK, rule out any break-up of the company or raid of the pension surplus.”

Labour’s shadow business secretary Jonathan Reynolds has written to Mr Kretinsky calling for safeguards to be put in place to protect Royal Mail and ensure it is not operated overseas.

Mr Kretinsky’s investment in IDS has long been a source of controversy, coming under government scrutiny in 2022 amid national security worries after he built up his shareholding.

In the end, the then business secretary, Kwasi Kwarteng, did not intervene after a review of the stake.

The bid interest comes at a crucial time for Royal Mail, which put forward plans to Ofcom earlier this month to scrap second-class letter deliveries on Saturdays and cut the service to every other week day as part of overhaul efforts.

In its submission to Ofcom’s consultation on the future of the universal postal service, Royal Mail said it would keep a six-day-a-week service for first-class mail in a climbdown on previous calls for all Saturday letter deliveries to be scrapped.