The UK government’s decision to call in and review Daniel Kretinsky’s £3.57bn takeover bid for the Royal Mail comes as no surprise. The Cabinet Office, with assistance from the Department for Business and Trade, is set to examine the Czech billionaire’s offer for the shares he does not already own in the national postal service’s owner, International Distribution Services (IDS).
Kretinsky’s EP Group, which currently holds a 27.5% stake in IDS, effectively wields significant influence over the Royal Mail. Despite the previous government clearing Kretinsky’s increase in shareholding from 25% to 27.5% in August 2022, the current administration, led by Prime Minister Rishi Sunak, is keen to demonstrate its commitment to due diligence.
The review will focus on the national security implications of the takeover, including Kretinsky’s alleged ties to Russia and the potential risks associated with his ownership of a stake in EUStream, a Slovakian pipeline that supplies gas from Russia to Western Europe and Ukraine. Kretinsky maintains that EUStream is solely a transmission operation and denies any direct dealings with Russia.
While Kretinsky has pledged to maintain first-class deliveries six days a week and keep the Royal Mail headquarters in the UK for five years, the Communication Workers Union (CWU) is calling for employee ownership of a significant stake in the company. The billionaire’s enigmatic nature and reluctance to speak publicly have earned him the nickname “the Czech Sphinx,” which may not bode well for his public relations efforts.
The Royal Mail, a cherished British institution, is facing financial challenges despite the growth in parcel deliveries driven by online shopping. Kretinsky’s interest in the company may stem from the profitability of other European delivery firms, which benefit from greater automation and the absence of a Universal Service Obligation (USO).
As the government’s security review unfolds, Kretinsky will need to navigate the complexities of turning around the Royal Mail while contending with potential conflicts with workers, MPs, the press, and consumer groups. The road ahead appears challenging, but the outcome of the review will undoubtedly shape the future of this iconic British institution.
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