Royal Mail takeover will be scrutinised under UK Government’s national security law
Royal Mail’s £3.5 billion takeover will face scrutiny by the UK Government, Jeremy Hunt has confirmed.
Earlier this week it emerged that Daniel Křetínský, a Czech billionaire and already a significant shareholder in International Distributions Services (IDS), Royal Mail’s parent company, intends to buy the rest of the IDS shares in a deal that would be worth £3.5 billion.
On Wednesday, Royal Mail’s board revealed it would be “minded” to accept such an offer in the interests of its shareholders.
Křetínský, referred to often in the media as “Czech sphinx”, is also a major shareholder in West Ham United Football club, owning 27% of that business.
Jeremy Hunt, Britain’s Chancellor of the Exchequer, on Friday, confirmed that the proposed takeover of IDS would be thoroughly evaluated in the context of the UK’s national security laws.
At the same time, UK business secretary Kemi Badenoch has insisted on guarantees to maintain Royal Mail's universal service.
And, separately, the Communication Workers Union (CWU) this week expressed its readiness to call for industrial action if worker conditions or services are compromised by any takeover.
The bid from Křetínský comes after Royal Mail has struggled financially, with IDS reporting losses of nearly £1 million a day.
Previously, Royal Mail had sought to renegotiate its public service obligations in the UK as management sought to cut costs.
Royal Mail’s struggles come against a backdrop of inflation and, more significantly the heightened competition in its parcels operation - with Amazon now handling its own deliveries and the presence of other parcel couriers has also squeezed down margins in recent years.
Meanwhile, due to its public service obligations, the formerly state-run postal company must continue to retain a “full service” for regular postal delivery operation, which is costly and in decline.
Britain’s National Security and Investment Act, of 2022, can allow the government to block the takeover of certain UK businesses by foreign entities.
