Royal Mail takeover uncertain as Kier Starmer’s Labour manifesto promise scrutiny

Kier Starmer’s Labour government, if elected, plans to ‘robustly scrutinise’ the proposed takeover of Royal Mail.

Moreover, Starmer’s manifesto claims a Labour government would seek additional governance for the national post service.

“Royal Mail remains a key part of the UK’s infrastructure. Labour will ensure that any proposed takeover is robustly scrutinised and that appropriate guarantees are forthcoming that protect the interests of the workforce, customers and the United Kingdom, including the need to maintain a comprehensive universal service obligation,” the manifesto reads.

“Labour will also explore new business and governance models for Royal Mail so that workers and customers who rely on Royal Mail services can have a stronger voice in the governance and strategic direction of the company.”

The share price of Royal Mail parent International Distribution Services (LSE:IDS) remains at a substantial discount to the 360p per share takeover offer pitched by Czech billionaire Daniel Křetínský.

On Thursday afternoon, after the release of Labour’s election manifesto IDS shares were priced at 331.8p each.

Stockbroker AJ Bell in a note, meanwhile, reacted by saying the takeover is ‘far from a done deal’.

“Labour doesn’t seem keen to let Royal Mail slide into foreign ownership without guarantees that protect workers and the people who rely on the postal service, namely the whole of the country,” AJ Bell investment analyst Dan Coatsworth said in a note.

“While Czech bidder Daniel Křetínský has already pledged a series of undertakings to whoever is in government, Labour explicitly referencing the company in its election manifesto implies it will not be a pushover if elected to Number 10 on 4 July.

“Labour’s intention to let workers and customers have a ‘stronger voice’ in how the company is run would give them nearly the same rights as a shareholder. Křetínský might think that is a step too close to nationalisation.”

He added: “Royal Mail is so engrained in the UK’s infrastructure system that any foreign bidder would find it hard to take the business private and do what they want behind closed doors.

“Investors seem to share that view judging by the share price reaction since the formal bid on 29 May.”