Confirming the £3.6bn deal earlier today (16 December), seven months after IDS agreed to terms in May, the government said it would retain a ‘golden share’ in IDS, meaning any changes to Royal Mail’s ownership, tax residency or headquarters will need its approval.
The deal is also subject to a number of conditions on EP, including the retention of the universal service obligation (USO) for a fixed price for first-class post anywhere in the country for at least five years; EP has agreed separate deals with unions that will see jobs safeguarded and employees given a 10% stake in any dividends paid to Křetínský.
Dividends will not be paid from Royal Mail to its owners until the company meets financial and performance obligations set by regulator Ofcom, and dividend and asset sales will be blocked if they endanger the USO.
Ofcom last week fined Royal Mail £10.5m for failing to meet its delivery targets in 2023/24.
Keith Williams, non-executive chair of IDS, said the decision was an important milestone in the approval process.
He said: “The IDS board welcomes the government’s endorsement and legal backing for the comprehensive package of undertakings and commitments we negotiated.
“These provide our customers, colleagues, unions, regulators and broader stakeholders with safeguards for the provision of the USO, the ongoing financial stability of Royal Mail, the maintenance of colleague benefits, and Royal Mail’s broader role in the United Kingdom.
“We welcome the government’s commitment today to secure a stable future for Royal Mail. This will not come from a change in ownership alone but must also be backed by urgent reform of the Universal Service and the continued transformation of this great British business.”
Dave Ward, general secretary of the Communication Workers Union (CWU), said that the CWU, Communication Managers Association (CMA) and Unite had reached a negiotiatiors’ settlement with EP to protect jobs, ensure good governance, restore the quality of service, and improve terms and conditions of work for their members.
“This agreement provides the foundation to rebuild Royal Mail,” Ward said.
“These have been challenging negotiations but through the support of our members we have delivered what by any measure is a groundbreaking agreement which puts postal workers and customers back at heart of everything we do in Royal Mail.
“Ultimately, the CWU will always campaign for Royal Mail to be returned to public ownership, but the reality is once it became clear the government would support this takeover, our role as a trade union was to do everything possible to protect our members.
“The other major factor here is whilst many will fear Royal Mail falling into the hands of a foreign equity investor, the truth is that the status quo is what will kill off postal services in the UK.
“The Royal Mail Group Board have been running the company into the ground over a sustained period and in the process have completely alienated their own workforce. It is time for a fresh start and a complete reset of employee and industrial relations.”
IDS shareholders will now have to give the final deal approval by selling their shares to EP, following their vote in September to approve it. The deal will likely complete in early 2025, once 75% of IDS is owned by EP.
