Kretinsky’s £3.6bn bid to buy Royal Mail on hold as investigation takes place
Daniel Kretinsky’s bid to buy Royal Mail and its parent company IDS will face a government probe after a decision to call in the deal for an investigation under the National Security & Investment Act.
Despite fears that the IDS board’s acceptance of the £3.6billion takeover from the Czech billionaire’s company EP Group would slip through by September as the new Labour administration got to grips with running the country, the news released yesterday, 1 August, means the deal is now suspended as part of the process, with the probe expected to take up to two months.
And, with the news coming just a couple of days after the letter from the GCA and its partners demanding the government save the UK’s postal service was delivered to new business secretary Jonathan Reynolds, association ceo Amanda Fergusson issued an official reaction to the media which has already been picked up by The Guardian and Daily Mail.
“Whoever owns Royal Mail, we’re all looking for lock-tight, long-term undertakings on affordability and reliability,” Amanda said. “Above all communities need a postal service that performs, serving the needs of small businesses and consumers.”
The call-in means the government could block the deal, although a previous review when Daniel increased his company’s stake in Royal Mail’s owner IDS found no issues but, according to the BBC, this probe will be more thorough as EP Group wants to take over the whole business in a transaction worth £5bn overall, including assumed debts.
The new minister held direct talks with the Czech recently and sources told the BBC that the discussions are “ongoing and have been constructive”, while the investigation will be run by the Cabinet Office with input from the Department For Business & Trade.
The BBC said the Czech’s business links to Russia, including a company that carries Russian gas into Europe with permission from the European Union, will be scrutinised, as well as whether the UK could be hurt by the private purchase of the 508-year-old mail delivery service.
The main fears are for the universal service obligation (uso) under which Royal Mail is legally obliged to deliver letters and parcels anywhere in the country for the same price six days a week which is already under threat following industry regulator Ofcom’s Future Of The Universal Postal Service consultation earlier this year which mooted possible reforms, including cutting the second class service to five or even three days, and hiking first class prices for next-day deliveries.
Daniel Kretinsky has committed in writing to keeping the uso for five years, but expanded on that promise in an interview with the BBC on 16 July when he said: “Royal Mail is going to be the provider of uso so in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”
He added that he “completely excluded” walking away from the uso “as long as I’m alive”.
