Czech Billionaire’s £3.6bn Takeover of Royal Mail Parent Firm to Face Government Security Review
A bid by Czech billionaire Daniel Kretinsky to take full control of Royal Mail’s parent company is under review by the Cabinet Office, according to reports from the PA news agency. The proposed takeover, worth £3.6bn, will be scrutinized under the National Security and Investment (NSI) Act, which gives the government the power to assess potential economic and national security concerns.
Government officials have the authority to block the deal or request specific commitments from the suitor if the review raises significant concerns. The BBC has also reported that potential links to Russia will be included in the investigation due to Kretinsky’s gas pipeline interests in the country.
Previously, the Conservative government had cleared Kretinsky’s purchase of shares that made him the largest investor in International Distribution Services (IDS), the owner of Royal Mail. IDS has since agreed to a takeover by Kretinsky’s EP Group in May. The proposed acquisition has sparked controversy due to Royal Mail’s important role in the UK.
However, IDS has assured that if the deal is completed, the new owner will maintain its UK tax residency, headquarters, branding, and existing employment rights. The company also stated that the new owner has committed to maintaining the current Royal Mail universal service obligation of one-price-goes-anywhere first-class post six days a week.
Furthermore, EP Group has pledged to keep the existing workforce intact, with no significant changes in headcount or reductions in frontline workers beyond existing plans. With over 110,000 employees, Royal Mail is one of the largest employers in the UK. The Communication Workers Union (CWU), which represents Royal Mail’s delivery staff, has expressed concerns about the takeover and has also opposed Royal Mail’s plans to reduce its universal service obligation on cost grounds in case the takeover fails.
CWU leader Dave Ward has urged EP Group to expand its commitments to the workforce and has welcomed the Cabinet Office’s investigation. In response to the scrutiny, Kretinsky, who already holds a 27% stake in IDS, has reassured that the company will be safe in his hands. In a statement made in June, he expressed his respect for Royal Mail’s history and tradition and acknowledged the responsibility that comes with owning such a critical national infrastructure.
The EP Group has decades of experience in owning critical national infrastructure, and with the acquisition of IDS, it aims to become one of the largest postal logistics groups in Europe. The review by the Cabinet Office is expected to take approximately two months to complete. Neither EP Group nor the Cabinet Office have commented on the ongoing investigation.
