United Kingdom finalizes agreement to transfer ownership of the 5-century-old Royal Mail to a wealthy Czech magnate
Daniel KrčETínsky's corporation, EP Group, has made "legally binding agreements" with the UK government as part of the process to acquire the postal service from its British parent company, International Distribution Services, as per a government announcement published on Monday.
These agreements involve seeking government approval to shift Royal Mail's headquarter and tax residency abroad, but both will remain in the UK for at least five years.
Additionally, EP Group is required to adhere to the "universal service obligation," which means delivering priority letters six days a week across the UK at a flat fee, everywhere. The company has also agreed to engage in 'good faith' negotiations with relevant labor unions.
The £3.6 billion ($4.6 billion) deal, which International Distribution Services approved in May, has sparked concerns over the job security of thousands of Royal Mail employees and the future of a significant national asset providing a crucial public service.
The commitments made to the government by EP Group guarantee the continuity of Royal Mail's standing as a renowned British institution while enabling it to operate as a private company without daily interference from the government, as stated by the Department for Business and Trade.
The sale follows a challenging period for Royal Mail, which was privatized in 2013. The company has experienced a significant decline in service demand and escalating losses. Pleas for a reduction in the obligation to deliver priority letters six days a week have been unsuccessful.
Last week, Ofcom, the UK postal service regulator, imposed a £10.5 million ($13.3 million) penalty on Royal Mail for failing to meet its delivery targets.
"With millions of letters arriving late, too many people aren't receiving what they paid for when buying a stamp," said Ian Strawhorne, Ofcom's director of enforcement, in his statement. "Royal Mail's subpar service is now undermining public trust in one of the UK's oldest institutions."
Who is KrčETínsky?
KrčETínsky, the primary shareholder of EP Group, manages a multinational clique of European energy companies, retailers, and football clubs. Valued at an estimated $7 billion, as per the Bloomberg Billionaires Index.
The magnate commenced his career as a lawyer, according to EP Group's website. He also served at J&T, a European financial firm, where he ascended to the position of partner in 2003.
KrčETínsky founded EP Group in 2016 with business partner Patrik Tkač. Through its investment arm, Vesa Equity Investment, KrčETínsky has acquired stakes in prominent brands such as Foot Locker (FL) in the US, FNAC in France, and supermarket Sainsbury's in the UK.
Certain English soccer supporters are already aware of the relatively obscure billionaire.
Three years ago, the businessman acquired a 27% share in West Ham United Football Club through another of his investment firms. This places KrčETínsky as the club's second-biggest shareholder, as per its website.
The business arrangement with the UK government allows EP Group to relocate Royal Mail's headquarters and maintain tax residency abroad, but both will remain in the UK for a minimum of five years. Due to KrčETínsky's involvement with EP Group, the corporation now holds a significant 27% share in West Ham United Football Club.
