Hunt asks regulators to check billionaire’s promises in Royal Mail takeover bid

Jeremy Hunt has called on regulators to closely examine guarantees given by a Czech billionaire behind a £3.6bn takeover of Royal Mail amid concerns the letter and parcel service could be taken apart soon after the undertakings expire.

The legally binding guarantees include maintaining the the one-price-goes-anywhere Universal Service Obligation which sees mail delivered six days a week, keeping the Royal Mail name and brand, and for the postal service to retain its UK headquarters and tax residency.

Daniel Kretinsky has pledged not to spin off the lucrative parcels business from letters business but it has emerged the legally binding commitments are only valid for three years.

There are growing concerns, including among shareholders of the Royal Mail’s parent company, International Distribution Services (IDS) about the Czech deal proceeding. The IDS board of directors have recommented accepting the offer.

Mr Hunt said that ministers could extend the time frame of the guarantees – also said to include no compulsory staff redundancies.

“I can’t predict what’s going to happen in five or 10 years’ time, but three years is a very long time. And I’m sure the Government will keep it under review,” he told LBC radio.

“It’s entirely possible, we will decide that we should extend it beyond that. But that’s for three years’ time.”

He said the City regulators should look at the guarantees “very carefully”.

Foreign ownership of the Royal Mail was not a problem. “I do think that for our economy to modernise, we need to attract investment from all over the world,” he said.

Some investors believe the deal does not value the Royal Mail properly. Jeremy Smith, at Columbia Threadneedle Investments, which holds a 5 per cent stake in IDS said: “We believe that the management team has done a good job to turn the company around and additional equity value can be delivered over time for long-term shareholders,” he told The Times.

The opposition comes after the board, led by Keith Williams, recommended a firm offer from EP Group, controlled by Daniel Kretinsky, the Czech energy tycoon and International Distribution Services’ largest shareholder with 27.6 per cent.

Other shareholders have questioned whether any government will approve the deal under the National Security and Investment Act.