The deal includes legally binding commitments to protect Royal Mail’s Universal Service Obligation (USO), which guarantees letter deliveries six days a week and parcels five days a week.

EP Group has pledged to maintain the USO for as long as it owns Royal Mail, and to keep the company’s headquarters and tax residency in the UK for at least five years. The government will retain a “golden share” allowing it to veto major changes to ownership, headquarters, or tax residency.

Keith Williams, non-executive chair of IDS, 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 Universal Service Obligation, the ongoing financial stability of Royal Mail, the maintenance of colleague benefits, and Royal Mail’s broader role in the United Kingdom.”

The deal comes amidst a review of the USO by regulator Ofcom, with Royal Mail proposing to reduce second-class deliveries to alternate weekdays to cut costs. Ofcom acknowledges the need to modernise the service in light of declining letter volumes.

To further safeguard employee interests, a worker group will be formed to consult with Royal Mail directors, and workers will receive a 10% share of any dividends paid to Mr Kretinsky.

Mr Kretinsky aims to leverage the expertise of IDS’s profitable European parcels business, GLS, to revitalise Royal Mail’s parcel delivery operations and compete more effectively in the growing market.

The takeover, initially reviewed under national security laws due to Royal Mail’s critical infrastructure status, is expected to be finalised early next year.

Russ Mould, investment director at AJ Bell, said: “Getting the green light from the government and an agreement in principle with unions clears some of the biggest hurdles for Daniel Kretinsky’s efforts to buy Royal Mail and its parent company.

“Shareholders still need to vote on the takeover and there is no certainty that it will sail through. However, it feels as if any opposing shareholders would have already expressed their dissatisfaction by now.

“There are no alternative bids on the table and this is proving to be one of the most complicated takeovers in years, which suggest shareholders might be ready to take the money and move on.

“EP Group is offering 370p per share. While certain shareholders have suggested IDS’s overseas parcels arm is worth at least 350p per share, EP Group might argue that the UK component (Royal Mail) doesn’t deserve a chunky price given the work involved to fix it.”