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The Chancellor has voiced concerns over the proposed takeover of Royal Mail by a billionaire dubbed the ‘Czech Sphinx’ in a sign that a deal could be blocked.
As analysts suggested that tycoon Daniel Kretinsky would have to raise his bid for the postal group to more than £4billion, Jeremy Hunt said there were ‘lessons’ to be learned from the tangled mess at Thames Water.
Asked about a foreign take-over of Royal Mail owner International Distributions Services (IDS), he said: ‘Do I look at what’s happened to some of the water companies and say that we shouldn’t learn any lessons? Absolutely not.
‘We need to make sure that companies are regulated in a way that makes sure that what happens to the balance sheet doesn’t do damage to public services on which we all depend.’
Speaking on the fringes of International Monetary Fund meetings in Washington, Hunt added: ‘At the same time we must also make sure that we continue to attract international investment.
Debt fears: Asked about a foreign takeover of Royal Mail, Chancellor Jeremy Hunt (pictured) said there were ‘lessons’ to be learned from the tangled mess at Thames Water
That needs to be done in a transparent and open way so that investors know exactly what they are looking for and can depend on consistency in the approach taken by the state.’
The Treasury is currently grappling with efforts to rescue Thames Water, which has 16m customers in southern England and is struggling under the weight of an £18bn debt pile.
Thames Water was sold to German utility RWE in 2001 and subsequently auctioned off to Australian giant Macquarie –dubbed the ‘vampire kangaroo’ – in 2006.
It is now owned by a consortium of shareholders, including sovereign wealth funds in China and Abu Dhabi, and pension funds in Canada and the UK.
Although Hunt did not say ministers would block foreign ownership of Royal Mail, his reference to Thames Water highlights the sensitivity in Government around such a deal.
The unions have already come out strongly against a takeover though there are suggestions Labour is open to the idea.
IDS this week revealed it has already rejected one bid from West Ham United co-owner Kretinsky worth 320p a share, or £3.2billion.
But it is understood the Czech tycoon, who has a 27.6 per cent stake in the company and is also a major investor in Sainsbury’s, is now preparing a higher offer.
Analysts at investment bank JP Morgan said the company merits a valuation of £4.2billion, or 441p per share.
But experts have warned a deal could be called in under the National Security and Investment Act, which allows the Government to block takeovers.
Ministers allowed Kretinsky to raise his stake in Royal Mail when it breached the 25 per cent threshold in 2022.
But a leading analyst, who asked not to be named, said clearance would be required for a full takeover.
‘Ironically, a precedent was set back in 2022 when Kretinsky requested pre-approval to raise his stake above 25 per cent,’ the analyst said.
‘The Government chose to not block that. But a full takeover would be a different matter.’
