Royal Mail £3.57bn takeover by Czech billionaire called in by Cabinet Office

Government officials are expected to scrutinise any links to Russia, given that the billionaire investor Daniel Kretinsky owns a stake in a significant gas pipeline from Russia to Europe

The UK government has called in the £3.57billion takeover deal of Royal Mail’s parent company, International Distribution Services, by Czech billionaire Daniel Kretinsky, citing security rules.

The Cabinet Office has initiated a review process under the National Security and Investment (NSI) act, according to sources familiar with the matter. Both Mr Kretinsky’s EP Group and the Cabinet Office have chosen not to comment on the situation.

The review will determine if the sale to Mr Kretinsky, who is already IDS’s largest shareholder, could potentially impact the UK’s economic infrastructure or pose a security risk. Government officials are expected to scrutinise any links to Russia, given that the billionaire investor owns a stake in a significant gas pipeline from Russia to Europe.

If the review raises major concerns, the government could block the deal or request specific commitments from the suitor.

The review process is anticipated to last up to two months. Insiders have stated that a review under the NSI act is “not a surprise”, as the government took a similar approach when Mr Kretinsky increased his shareholding in Royal Mail’s owner to 27.5% in 2022. Last week, Labour’s Business Secretary Jonathan Reynolds hinted that the new Government was likely to call in the takeover, emphasising that he would speak directly with Mr Kretinsky.

Labour’s election manifesto firmly promised to “ensure that any proposed takeover is robustly scrutinised”. Meanwhile, Mr Kretinsky has committed to upholding the service’s crucial mandate to deliver letters six days a week across the UK, respecting its Universal Service Obligation.

Yet, just last month, Martin Seidenberg, chief executive of IDS, reiterated the group’s stance on overhauling the service requirement, as the volume of letters sent plummets.