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Royal Mail at risk of being broken up after £3.6bn foreign takeover

EP Group made a number of other legally-binding undertakings to the Government as part of the bid.

These include maintaining key services under Royal Mail’s universal service obligation for the next five years, such as the one-price-goes-anywhere system and Saturday deliveries for first class post.

Mr Kretinsky has agreed to maintain the Royal Mail brand, protect pensions and keep the company headquartered and tax resident in the UK and continue to recognise its unions.

He has also pledged not to significantly increase the company’s debt as a result of the transaction or through payouts.

These undertakings will be valid for five years following the completion of the deal, which requires approval from shareholders at the company’s annual meeting in September.

The Business Secretary could seek redress through the civil courts should any undertakings be breached.

In a statement, Mr Kretinsky said: “The EP Group has the utmost respect for Royal Mail’s history and tradition, and I know that owning this business will come with enormous responsibility – not just to the employees but to the citizens who rely on its services every day.

“The scale of the commitments we are offering to the company and the UK Government reflect how seriously we take this responsibility, to the benefit of IDS’ employees, union representatives and all other stakeholders.”

Keith Williams, chairman of IDS, said: “IDS has the potential to become a leading international logistics player.

“Both the IDS Board and EP are acutely aware of their responsibilities to IDS and particularly to the unique heritage of Royal Mail and its obligations as the designated Universal Service Provider of postal services in the UK.

“The IDS Board has negotiated a far-reaching package of legally binding undertakings and commitments which provide our customers, employees and broader stakeholders with important safeguards.”

Mr Kretinsky’s offer consists of 360p a share in cash, plus a final dividend of 2p per share and a special dividend of 8p per share. It values IDS at £3.57bn, or almost £5.3bn once debt is included.

The tycoon has secured financing from BNP Paribas, Citi and JP Morgan for the deal, which is being carried out alongside his Czech-based investment firm J&T.

IDS chief executive Martin Seidenberg stands to make around £264,000 from the takeover, while chairman Keith Williams is in line for roughly £210,000.

It comes as Royal Mail campaigns for an overhaul of the universal service obligation (USO) amid concerns outdated regulations have left it financially unsustainable.

Royal Mail has submitted proposals that would see it deliver second-class mail just three times a week, though six-day deliveries would be maintained for first-class post.


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