Royal Mail takeover under threat from national security investigation

The Czech billionaire’s planned £3.6bn takeover of Royal Mail’s parent company will be subject to scrutiny under government security rules, it has been reported.

The PA news agency said it believed the Cabinet was considering an application by Daniel Kretinsky to take full control of the company under the National Security and Investment (NSI) Act.

It gives the government the power to assess potential risks to the economy and national security, and to potentially block the deal or demand specific commitments in exchange for the green light.

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The BBC reported that potential links with Russia were considered because of the tycoon’s interests in gas pipelines in that country.

If the review raises serious concerns, government officials can block the transaction or demand specific commitments from the interested party.

A previous investigation by the then Conservative government approved Mr Kretinsky’s share purchase, making him the largest investor in International Distribution Services (IDS).

Royal Mail’s owner agreed to let EP Group take over Mr Kretinsky in May, a move that is naturally controversial given Royal Mail’s role in the UK.

IDS has previously said that if the deal goes through, the new owner will retain its UK tax residence, head office, brand and existing employment rights.

The EP Group’s ownership would also include involvement in the day-to-day operations Royal Mail The company said it had introduced a requirement to provide universal first-class postal services at a single price, six days a week.

He added that the new owner “has no intention of making any material changes to overall headcount or reducing the number of front-line employees” beyond existing plans.

Royal Mail alone employs over 110,000 people.

Courier workers’ union CWU fears takeover and opposes Royal Mail’s plans ease the obligation to provide universal services due to costs if the takeover failed.

CWU leader Dave Ward has called on the EP group to extend its commitments to workers and welcomed the prospect of a Cabinet-led inquiry.

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Mr Kretinsky, who is already a 27 percent shareholder in IDS, assured that the company would be safe in his hands.

In June, he said EP had “decades of experience in managing critical national infrastructure” and IDS could “become one of the largest postal logistics groups in Europe.”

“EP Group has the utmost respect for the history and tradition of Royal Mail. I know that owning this company comes with a huge responsibility – not only to its employees, but also to the citizens who rely on its services every day,” he added.

Neither the EP nor the Cabinet Office have commented on the ongoing review. Business Secretary Jonathan Reynolds recently suggested such an inquiry was inevitable.

The work is expected to take approximately two months to complete.