Meet Czech 'sphinx' Daniel Kretinsky - the man who just spent £5.3 billion to buy Royal Mail

Royal Mail’s sale to Czech billionaire Daniel Kretinsky has been cleared by the Government, paving the way for the more than 500-year-old postal service to pass into foreign ownership for the first time.

Business Secretary Jonathan Reynolds confirmed the Government had secured a raft of legally binding commitments with Mr Kretinsky’s EP Group over the postal service, including protecting the one-price-goes-anywhere delivery commitment and a pledge to keep Royal Mail headquartered in the UK.

Mr Kretinsky and International Distribution Services agreed to a deal worth £3.6 billion – or £5.3 billion including debt – in May but had been waiting for approval from the Government, which must sanction the takeover given the national importance of Royal Mail and the postal service in the UK.

Royal Mail’s sale to Czech billionaire Daniel Kretinsky has been cleared by the Government, paving the way for the more than 500-year-old postal service to pass into foreign ownership for the first time. | PA / Getty / Canva

Mr Kretinsky – nicknamed the Czech sphinx – has since made several further concessions to gain approval, including giving the Government a “golden share” in the postal service, meaning it will need to approve any key changes to Royal Mail’s ownership, headquarters location and tax residency.

Mr Reynolds said: “For too many years progress on securing a stable future at Royal Mail has stalled, but from day one we have been committed to providing a secure future for thousands of workers and customers.”

He added the agreements reached with EP Group showed “we are working towards ensuring a financially stable Royal Mail with protected links between communities other providers can’t reach”.

Mr Kretinsky said they had worked to ensure “unprecedented commitments and undertakings that demonstrate the high regard EP Group has for Royal Mail as an institution, the service it provides to millions of UK homes and businesses, and Royal Mail employees”.

File photo dated 20/01/15 of Royal Mail branding on the side of a post van in Cambridge. Royal Mail's takeover by a Czech billionaire has been given the green light by the Government, allowing the postal service to pass into foreign ownership for the first time. Issue date: Monday December 16, 2024. PA Photo. It is understood that permission for the sale of International Distribution Services (IDS) to Daniel Kretinsky's EP Group is set to be officially announced later on Monday morning after being reviewed by the Government under the National Security and Investment Act. See PA story CITY RoyalMail. Photo credit should read: Chris Radburn/PA Wire | Chris Radburn/PA Wire

It sees the biggest hurdle overcome for the deal to go through, with the takeover now expected to complete early in 2025.

There were already a number of pledges made by Mr Kretinsky when the proposed deal was announced, including a vow to keep the brand name and retain Royal Mail’s HQ and tax residency in the UK for the next five years, as well as commitments to protect the company’s universal service obligations.

As part of the commitments, EP Group said it will also ensure that Royal Mail complies with regulatory conditions and that it will not undergo any changes to its corporate structure.

The group said that it had also reached an agreement to recognise and negotiate with the unions representing Royal Mail’s frontline staff and managers – the Communication Workers Union (CWE) and Unite respectively – for at least the next five years.

Keith Williams, chairman of IDS, said the agreement between EP Group and the Government “marks an important milestone in the approvals process”.

Regulator Ofcom has fined Royal Mail £10.5 million for missing its post delivery targets in the 2023-2024 financial year. | Canva

He said the commitments “provide our customers, colleagues, unions, regulators and broader stakeholders with safeguards for the provision of the Universal Service Obligation, the ongoing financial stability of Royal Mail, the maintenance of colleague benefits, and Royal Mail’s broader role in the UK”.

Under its service obligations, Royal Mail must deliver letters six days a week to all 32 million addresses in the UK for the price of a stamp – a requirement stipulated by law under the Postal Services Act 2011.

Regulator Ofcom has been reviewing the future of the universal service since January and is proposing plans to ditch Saturday deliveries for second-class letters while keeping first-class mail six days a week.

On Friday, Royal Mail was fined £10.5 million by Ofcom for missing its first and second-class postal delivery targets in 2023-24.

Ofcom chief executive Dame Melanie Dawes told BBC Breakfast on Monday there were “real questions about what the service needs to be, going into the future”.

She said: “We will be coming forward next year with proposals to make sure that it is sustainable, and absolutely we will hold Royal Mail to account in delivering – whatever that final outcome is.

“Ultimately though it is up to the company, under their new ownership, to deliver now.”

Who is Daniel Kretinsky?

The 49-year-old, known as the “Czech sphinx” reportedly because of his quiet, inscrutable style, built his career as an entrepreneur and lawyer.

He has a net worth of £6 billion, according to the Sunday Times Rich List, which climbed by £2 billion over the course of a year.

He built his fortune in the energy industry, and has assets spanning the Czech Republic, Germany, Italy, Slovakia, the Netherlands and the UK.

They include Eustream, which moves Russian gas via pipelines running through Ukraine, the Czech Republic and Slovakia.

Why did he want to buy Royal Mail?

Mr Kretinsky already owned a 27% shareholder in Royal Mail’s parent company, International Distribution Services (IDS) through his company EP Group.

The company has previously highlighted its experience in owning national infrastructure, and said it views IDS as a “strong business with solid foundations and the potential to become one of the leading postal logistics groups in Europe”.

Mr Kretinsky and IDS agreed a deal worth £3.6 billion – or £5.3 billion including debt – in May, but had been waiting for the UK Government to give it the go-ahead.

What else does he invest in?

Mr Kretinsky is known for having significant interests in football through the ownership of several clubs, including his boyhood club Sparta Prague, as well as a 27% stake in West Ham United.

He has also built up holdings in several well-known British brands, including a 10% stake in supermarket giant Sainsbury’s and sportswear retailer Footlocker.

Mr Kretinsky has a 25% stake in an exclusive private island resort in the Maldives, called Velaa.

And he owns one of Britain’s most expensive homes, the 15-bedroom Heath Hall mansion in Hampstead, which he bought for £65 million in 2015 and reportedly once rented out to Justin Bieber during a UK tour.

Will the new ownership change Royal Mail?

The takeover approach attracted significant scrutiny this year, and needed to be sanctioned by the Government given the national importance of Royal Mail and the postal service in the UK.

Mr Kretinsky has indicated that he wants to modernise Royal Mail, including investing in services like parcel lockers to compete with giants like Amazon, Evri and InPost.

EP Group has also previously backed IDS’s ambitions to reform the universal service obligation (USO) which it argued has held back Royal Mail’s transformation and made it harder for it to keep up with rapidly rising competition in the parcels market.

Nevertheless, the firm made a series to commitments to protect Royal Mail, relating to its postal service obligations and UK identity, as part of the agreement with the Government.

The Government will also need to approve any key changes to the delivery firm’s ownership, headquarters location and tax residency.