Thursday, June 13, 2024

UK to look at security implications of Křetínský Royal Mail bid

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The chancellor, Jeremy Hunt, has said the UK will look at the national security implications of a bid for Royal Mail by the Czech billionaire Daniel Křetínský, but indicated ministers were not opposed to the takeover in principle.

Royal Mail’s owner, the London-listed International Distributions Services (IDS), on Wednesday backed a £3.5bn bid by Křetínský’s EP Group, after initially rejecting a £3.2bn offer.

On Friday, Hunt indicated that the government would use its powers to scrutinise takeovers if they have national security implications, in a speech in London in which he also dangled the prospect of further tax cuts in the autumn. The national security checks could mean a lengthy process for Royal Mail’s takeover.

The prospect of a foreign buyout of one of the oldest parts of the UK’s infrastructure has caused alarm in some quarters, including some MPs, unions representing postal workers, and campaigners for the rights of elderly people – who fear that less profitable parts of the 508-year-old service could be cut back.

The share price of Royal Mail’s owner has soared 50% since the first bid a month ago to a two-year high, although at £3.21 it remains short of the £3.70-a-share bid.

Hunt said “as a rule we welcome international investment in British companies”, and praised the UK’s “openness to companies from overseas and not just the capital they bring in, but the expertise and the funding”.

He said: “And so we will continue with that approach, but we do always look at national security considerations and make sure that in terms of our core infrastructure there are no risks to that going forward. Any bid for Royal Mail will go through that normal process.”

Křetínský made his fortune through buying up coal-fired power stations in eastern Europe, but he has since turned his attention to the UK, including taking separate stakes in Sainsbury’s supermarket and West Ham football club.

The Communication Workers Union, the biggest union representing Royal Mail workers, has said it is prepared to call a ballot on industrial action if it feels Křetínský is trying to cut back workers’ pay or employment conditions.

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The government introduced the national security and investment act in 2022 to allow it to intervene in takeovers in certain sectors, ranging from military technology and cryptography to energy, computing, quantum technology and even some transport.

Since then the government has blocked some transactions under the laws, including the attempted takeover of the Newport Wafer Fab semiconductor factory in south Wales and the purchase of the electronic design company Pulsic by a Hong Kong rival. The government last week cleared the merger of Vodafone and Three’s UK mobile networks on security grounds, although a competition inquiry is still running.

The business secretary, Kemi Badenoch, has also reportedly told Royal Mail that the sale will not be allowed unless it offers guarantees that some services are maintained.

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