Royal Mail takeover faces national security investigation

A Czech billionaire’s planned £3.6bn takeover of Royal Mail’s parent firm is to face scrutiny under government security rules, it has been reported.

The PA news agency said it understood that the Cabinet Office was reviewing Daniel Kretinsky’s bid to take full control of the company under the National Security and Investment (NSI) act.

It gives the government the power to assess potential economic and national security concerns and potentially block the deal or ask for specific commitments in return for the green light.

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The BBC reported that potential links to Russia would be included due to the tycoon’s gas pipeline interests in the country.

Government officials could block a deal or ask for specific commitments from the suitor if the review raises major concerns.

A previous study by the-then Conservative government had previously cleared Mr Kretinsky’s purchase of shares that saw him become the largest investor in International Distribution Services (IDS).

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Royal Mail’s owner agreed a takeover by Mr Kretinsky’s EP Group in May. It is naturally controversial given the role Royal Mail plays across the UK.

IDS has previously said that if the deal completes, the new owner would maintain its UK tax residency, headquarters, branding and existing employment rights.

EP Group’s ownership would also include a commitment to the current Royal Mail universal service obligation of one-price-goes-anywhere first-class post six days a week, the company said.

It added the new owner had “no intention to make any material changes to overall headcount or reductions in the number of frontline workers” beyond existing plans.

Royal Mail alone employs more than 110,000 people.

The union for delivery staff, the CWU, is wary of the takeover and has also opposed plans for Royal Mail to water down its universal service obligation on cost grounds should the takeover fail.

CWU leader Dave Ward has called on EP group to expand its commitments to the workforce and had welcomed the prospect of the Cabinet Office investigation.

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For his part Mr Kretinsky, who is already a 27% shareholder in IDS, has promised the company would be safe in his hands.

He said in June that EP has “decades of experience in owning critical national infrastructure” and IDS could “become one of the largest postal logistics groups in Europe”.

“The EP Group has the utmost respect for Royal Mail’s history and tradition, and I know that owning this business will come with enormous responsibility – not just to the employees but to the citizens who rely on its services every day,” he added.

Neither EP or the Cabinet Office would comment on the review underway. The business secretary Jonathan Reynolds had hinted recently that such a probe was imminent.

It is expected to take around two months to complete.

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