The Royal Mail group is on its way to passing into foreign ownership, but the state will keep a “golden share” in the company.
It means the government will have to approve any key changes to Royal Mail’s ownership, the location of its headquarters and tax residency.
This is something the government does with companies that are seen as crucial to its security, including the weapons manufacturers BAE Systems and Rolls-Royce.
In Royal Mail‘s case, it’s the company’s role in communications infrastructure that is of national importance.
Under the deal, the group has agreed to keep the Royal Mail’s HQ and tax residency in the UK for at least five years.
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It has also promised to maintain the universal service obligation for first-class post to be delivered anywhere in the country for a fixed price six days a week, while Mr Kretinsky is in control.
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However, it has been suggested that second-class post could be reduced to every other weekday.
The government has also blocked Royal Mail from making dividend payments to its owners unless the company meets financial targets.
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Dividends and asset sales will also be blocked if they put the universal service at risk.
This along with a promise that workers will receive a 10% share of any dividend paid to Mr Kretinsky means the EP group is also on its way to pacifying the unions.
Despite these safeguards, the deal will heighten scrutiny on the EP group’s secretive Czech owner.
Daniel Kretinsky has already shown a keen interest in UK assets – he has a 10% stake in Sainsbury’s and another 27% in the West Ham football club
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The sales have been funded from the profits of his vast energy portfolio.
That includes a gas transmission business called EUStream that carries Russian gas into Europe.
The business operates with the permission of the European Union (EU) and does not buy or trade in Russian gas. The UK government is clearly satisfied with Mr Kretinsky’s Russian ties, but they will likely come under greater scrutiny.
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In Royal Mail, the Czech billionaire sees a challenge and an opportunity to turn around and modernise a company that has been missing targets and being hit with fines by regulators.
