Problems with British postal unions send warning to Daniel Křetínský

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Britain’s postal union has issued a strike warning to Czech billionaire Daniel Křetínský if he fails to meet their demands in his takeover bid for Royal Mail, increasing the threat of industrial action that has dogged the company in the past.

Dave Ward, general secretary of the Communication Workers Union, said the group had decided to “take all steps necessary to protect Royal Mail’s working conditions and universal service obligation to deliver letters and parcels nationwide for the same price ”.

“There are certain things where if they were attacked we would take industrial action. We would organize a vote among our members,” he told the Financial Times, adding that the union would also challenge a separation of the group’s struggling letters business from the group’s more profitable parcels business.

Ward’s comments come after Křetínský’s EP Group, the largest investor in Royal Mail owner International Distributions Services (IDS), made a £5 billion including debt offer for the group.

This is despite long-standing tensions between management and postal staff, which have exacerbated Royal Mail’s struggle to make profits and maintain service levels in recent years.

IDS said on Wednesday it “intended to recommend the bid for Royal Mail and its separate Netherlands-based parcel business GLS”, after EP Group’s initial bid was rejected in April.

Analysts have suggested that a takeover of IDS could lead to a breakup of the business, isolating Royal Mail, which faces declining letter deliveries and strict regulatory targets, from the more profitable parcel group GLS.

Křetínský has made it clear during negotiations that he does not intend to separate Royal Mail from GLS, drain the group’s pension scheme surplus and avoid redundancies, people familiar with the matter have previously said.

However, shares in IDS traded at 322.8p on Friday, significantly lower than EP Group’s last offer of 370p per share earlier this week, indicating some investor skepticism about the prospects of a deal, especially with a general election looming lie in wait.

“The market price tells us that investors are skeptical about whether this offer will succeed,” said a top IDS shareholder.

Jeremy Hunt, the chancellor, said on Friday that a bid for Royal Mail would be subject to “normal” scrutiny on national security grounds.

“As a general rule, we welcome international investment in British companies,” he said, according to Reuters.

“But we always look at national security considerations to ensure that in terms of our core infrastructure there are no risks going forward and that any bid for Royal Mail will go through the normal process.”

Ward’s warning of industrial action risks repeating an 18-day strike in 2022 over management’s plans to bring working conditions in line with competitors, giving rivals such as Amazon and DPD the opportunity to take market share from the former state postal service.

Although Royal Mail and the CWU reached an agreement on pay and conditions last year, Křetínský’s offer has reignited the union’s fears about the company’s direction as it faces competition from rivals recruiting delivery workers on lower pay and more flexible contracts.

IDS said on Wednesday that the EP group had agreed to offer a “range of contractual obligations to protect important public interest factors and recognize Royal Mail’s status as an important part of the national infrastructure”.

These include protecting workers’ rights and continuing to recognize trade unions, protecting Royal Mail’s name and brand and maintaining the company’s base in Britain. Royal Mail’s one-price-goes-anywhere service and the delivery of first-class letters six days a week would also be maintained under the proposals, IDS said.

After meeting with IDS chief executive Martin Seidenberg and chairman Keith Williams, UK Business and Trade Secretary Kemi Badenoch welcomed the contractual commitments agreed with EP Group. But she said the government would have to consider and agree to the details of this.

The top IDS investor added: “The new offer is an improvement over the previous one. However, there are clearly some trade-offs: if the company asks for commitments from the bidder, you would expect those ‘costs’ to be reflected in the price paid.”

Ward warned: “we have to stay balanced [Křetínský’s reported assurances] with the reality of this man as a businessman.”

“We need more than guarantees. . . We will need a very detailed conversation with Křetínský and his people about what their plans are for the future.”

A representative for Křetínský declined to comment.

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