Royal Mail takeover bid to face national security review

Article contents:

**A proposed £3.5bn buyout by a Czech tycoon will be subject to “national security considerations” to protect core infrastructure**

*Alex Ralph, Chief Business Correspondent | Ali Mitib, May 17 2024, The Times*

A proposed takeover bid for Royal Mail would be subject to a national security review, the chancellor has said, as ministers come under pressure to scrutinise a £3.5 billion offer from a Czech billionaire.

Jeremy Hunt said on Friday that “as a rule, we welcome international investment in British companies”. But he added: “We do always look at national security considerations to make sure that in terms of our core infrastructure, there are no risks to those going forward and any bid for Royal Mail will go through that normal process.”

On Wednesday the board of International Distributions Services (IDS), Royal Mail’s parent company, announced that it was “minded” to recommend to its shareholders a 370p per share “non-binding” proposal from EP Group, a conglomerate controlled by Daniel Kretinsky.

EP Group now has until May 29 to make a firm offer under City takeover rules.

The prospect of an overseas acquisition of the 508-year-old formerly state-owned postal service, an important part of the nation’s infrastructure, has been greeted with concern by some MPs, the union representing postal workers and campaigners.

Questions have been asked over the future of the loss-making Royal Mail and the intentions and financing of the buyer, but EP Group has vowed to be a long-term investor in modernising the service.

On Thursday Kemi Badenoch, the business and trade secretary, met with Martin Seidenberg, the chief executive of IDS, on Thursday where she welcomed the contractual undertakings between the two sides, but said the deal would ultimately be for the government to consider and agree.

The government has said that its priority is to ensure that Royal Mail customers continue to get deliveries six days a week and a single price for post throughout the UK, “regardless of the owner”.
Kretinsky, a lawyer turned energy tycoon whose also has investments inJ Sainsbury and West Ham United football club, has a fortune of about £6 billion, according to the new Sunday Times Rich List.

Roman Silha, who heads mergers and acquisitions for the investment arm of EP Group’s shareholders, is leading the talks with the IDS board and will step up negotiations in London next week.

After EP Group’s initial offer of 320p a share was rejected, last month Hunt acknowledged the “lessons” to be learnt from the takeover of Thames Water, the which was loaded up with debt and paid out large shareholder dividends under private ownership.

However, it is understood that the conglomerate, which spans interests in energy, logistics, food wholesale and retail, is prepared to invest in Royal Mail through the roughly €4 billion of cash it generates a year, roughly half of which it is able to reinvest in its businesses.

It is also understood to be willing to make a commitment not to break up the group, as part of a number of pledges to be made to the government.

The investor, which also owns 30 per cent of PostNL, the Dutch parcels operator, could seek to expand IDS’s scale in the European postal services market through mergers and acquisitions.

Ian Lavery, the Labour MP and a member of the Commons business and trade committee, said that “neither the current model under which the Royal Mail is being run nor the proposed takeover by EP is in the best interests of the UK”.

He said: “This is one of our flagship public services and the idea that it should be run by corporations based elsewhere is absurd. The best option for the Royal Mail is for it to be run under public ownership in the best interests of the British public.”

Dennis Reed, the director of Silver Voices, a campaign group for the elderly, said Hunt’s comments did not go far enough.

“It feels like [the government] are going to find a way to approve it and I don’t think under any circumstances the Royal Mail, a vital part of the infrastructure, should be owned by someone from abroad,” he said. “For something like Royal Mail or the water industry or train companies, we say they have to be British-owned”.

He added that he did not believe assurances that the present level of service would be maintained.
Amanda Fergusson, the chief executive of the Greeting Card Association, said: “Our 500-plus members, largely small businesses, and the consumers they serve rely on a Royal Mail that’s national, reliable and affordable.

“That cannot be compromised. We will need to see these principles enshrined in any undertakings between the government, IDS and EP Group before any recommendation of this offer.”

Critical infrastructure needs to be owned by the government, letting foreign investors hoover out the uks assets hasn’t been working as well as the tories would have us believe.

At this point the uk is a failed company having its assets stripped before the administrators call time.

Prediction of review:

“Skim… skim skim… rubber stamp.”