Royal Mail facing £3.5bn takeover by ‘Czech Sphinx’

Royal Mail is set to fall into foreign hands for the first time in its 508-year history, writes Jessica Clark.

In a move that sent shockwaves through London City and Westminster, the board of its parent company backed a £3.5bn takeover offer from a billionaire dubbed the ‘Czech Sphinx’.

Yet with the Government unlikely to block any deal, it paves the way for the company – set up by Henry VIII in 1516 – to be taken into overseas ownership.

The bid from Czech energy and media magnate Daniel Kretinsky – who earned his nicknamed due to his enigmatic approach to business – comes at a turbulent time for Royal Mail, which last month begged ministers and regulators to allow it to cut second-class post to save money.

He is already Royal Mail’s biggest single shareholder, with a 27.5 per cent stake.

The deal could be blocked if ministers call it in under the National Security and Investment Act – and a Government spokesman said last night it was “monitoring developments very closely” – but a senior Whitehall source told said that ministers are not planning to intervene.

Keith Williams, chairman of Royal Mail owner International Distributions Services (IDS), blasted ministers for failing to allow reform of the postal service, claiming it left it vulnerable to foreign predators.

He said: “Despite four years of asking, the Government has not seen fit to engage in reform… and improve our financial position.”

However, his board’s swift approval of the offer last night received an immediate backlash from politicians and unions.

Labour insisted Royal Mail must remain a British company – but did not commit to blocking the takeover. Business spokesman Jonathan Reynolds set out a list of demands for Mr Kretinsky, including keeping the Royal Mail’s HQ in the UK and paying taxes.

He added: “Royal Mail is as British as it gets and Labour will take the necessary steps to safeguard its identity and place in public life.”

If the deal goes through it would see Royal Mail leave London’s stock market.

It had been sold off by the coalition government in 2013 for 330p per share, valuing it at £3.3bn.

Last month a £3.1bn offer from Mr Kretinsky was rejected, but yesterday he upped it by £400m.

Mr Williams said the IDS board is “minded to recommend this offer”.

Mr Kretinsky now has until May 29 to make a bid which would then be put to a shareholder vote.

Veteran Tory MP Sir Bill Cash said: “We have to remain resolute in having a national security review.” Meanwhile, Dave Ward, general secretary of the Communication Workers Union, accused Royal Mail’s top brass of “gross mismanagement”.

He said: “It cannot be right that a key part of national infrastructure is allowed to be owned by individuals who have no clear plan to put the workforce at the heart of turning Royal Mail around.”