Czech bidder's takeover of Royal Mail raises concerns
- Communication Workers Union expresses opposition to a foreign equity company taking over Royal Mail.
- Czech bidder's approach threatens to increase debt and risks for Royal Mail.
- Parent company acknowledges potential risks of nearly £2.4bn of loans being called in due to the deal.
Royal Mail's parent company, International Distribution Services (IDS), received a £3.6bn offer from Czech tycoon Daniel Kretinsky's EP Group. The Communication Workers Union (CWU) leader, Dave Ward, representing 112,000 UK frontline workers, believes the commitments made by EP Group are not sufficient. The deal includes maintaining UK tax residency, headquarters, branding, and employment rights. EP Group also promises to uphold Royal Mail's universal service obligation of one-price-goes-anywhere first-class post six days a week without reducing frontline workers. The CWU opposes any changes to Royal Mail's universal service obligation for cost reasons. Mr. Ward emphasized the need for strong commitments from EP Group that match their long-term ownership ambitions. The CWU advocates for a new ownership and business model that gives employees a stake in the company's future. EP Group acknowledges the importance of workforce support for the company's success. Royal Mail expressed concerns about financial risks associated with the sale to Daniel Kretinsky. Nearly £2.4bn of loans could be called in due to the deal, potentially jeopardizing the company's future. The board fears a financial squeeze from the debt-fueled takeover, with £2.3bn of the offer financed by new debt from European banks. Mr. Kretinsky has made legally binding pledges to protect Royal Mail's universal service. The deal structure aims to maintain Royal Mail's investment-grade credit rating post-acquisition to alleviate concerns about its future under private ownership. Analysts worry about potential renegotiation of debt terms at a higher price and less financial transparency under private ownership. The sale of Royal Mail's prime estate sites raises interest from delivery companies and property developers. The UK government, particularly Chancellor Jeremy Hunt, will scrutinize the takeover under national security laws. EP Group emphasizes its respect for Royal Mail's history and tradition, pledging to uphold its services and responsibilities to employees and citizens.