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The Czech billionaire Daniel Kretinsky’s £3.6 billion takeover of the Royal Mail has passed another key milestone after being cleared by the government under national security laws.
Pat McFadden, the chancellor of the Duchy of Lancaster, has conditionally approved the purchase of the 500-year-old institution by Kretinsky’s EP Group under the National Security and Investment Act.
The Cabinet Office said it means the deal is approved as long as EP Group “remains able to and continues to provide services that are in support of UK national security”.
Following the security clearance, the takeover is expected to go unconditional in the first quarter of next year, the Royal Mail’s owner, International Distribution Services (IDS), said.
Kretinsky, 49, a lawyer and part-owner of West Ham United FC, made his original fortune in the liberalisation of the Czech energy industry. He is now worth an estimated $9 billion following the acquisition of stakes in the Dutch post office PostNL and a range of European publishers, energy groups and retailers, including J Sainsbury.
He and his business interests built up a 25 per cent stake in IDS, the parent company of Royal Mail and the European and American courier business GLS. Kretinsky embarked on a recommended takeover in the spring after the Conservative government cleared his holding a stake in the company.
When the Labour government was elected in July, however, ministers called in the deal for review under post-Brexit national security protocols. These give the government the right of veto over strategically important companies such as a national postal provider, given its role in communications infrastructure.
Kretinsky had faced a further hurdle of winning over the Communication Workers Union (CWU), a powerful trade union that has spent recent years in an industrial relations battle with IDS and Royal Mail management.
Earlier this week the stars aligned for Kretinsky: the government indicated that it was prepared to wave through the deal so long as it was granted a so-called “golden share” in Royal Mail, giving it the power to hold Kretinsky to commitments over future ownership and employee relations.
These wide-ranging undertakings also include protecting the one-price-goes-anywhere delivery commitment and a pledge to keep Royal Mail headquartered in the UK.
Emboldened by that and deals over no compulsory redundancy commitments, dividend profit sharing and a say in management, the CWU announced that it also backed the bid.
Shareholders will now have to decide whether to tender their shares in favour of the deal. Should EP Group secure 75 per cent, including its existing 27.6 per cent stake, the offer can be declared unconditional and IDS will be delisted from the London Stock Exchange.
Kretinksy is likely to seek to expand Royal Mail’s business to tap into the growing out-of-home parcel locker market.
Gerald Khoo, an analyst at Panmure Liberum, the investment bank, said: “We do not expect shareholders to hold out for a better price, not least given the headwind from higher national insurance costs.”
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