ALEX BRUMMER: Daniel Kretinsky faces a long and arduous road to gaining control of Royal Mail

Keir Starmer is not known for his imprecise language, so it was fascinating to hear him warn against the risk of “selling off” vital assets as he unveiled plans to turn Britain into a green energy powerhouse.

The Prime Minister does not appear to be among those who argue that selling the “crown jewels” to foreign buyers demonstrates confidence in Britain.

It should come as no surprise that the government has decided to investigate Czech billionaire Daniel Kretinsky’s £3.6bn bid to buy Royal Mail under the National Security and Investment Act.

On the board of International Distribution Services (IDS), which owns Royal Mail, and among advisers and bankers (who are preparing to collect £146m in fees), there has been a vain belief that the deal could be completed quickly.

The hope was that this could be done quietly after the election.

Confidence was bolstered by the 2022 investigation into Kretinsky, nicknamed the “Czech Sphinx”, as he acquired a 27.5 percent stake in IDS.

No security threats were found due to links with Russia or any other state.

If you look at the way Whitehall has applied the law so far, it has only used its powers to interfere in deals where there are fears of technology transfer to potentially hostile nations like China.

It is often forgotten that the law has a much broader reach and draws lessons from the powerful and inflexible Committee on Foreign Investment in the United States.

Currently, Joe Biden’s White House is blocking Japan’s Nippon Steel’s ambition to acquire US Steel.

If the sale of Royal Mail is decided, the British public interest could be put to the test. The Cabinet will try to determine whether there is a link between Kretinsky, the Slovakian gas pipeline consortium Eustream and Russia.

There is apparently no direct connection of this kind, but Kretinsky is not bidding alone. His partner, J&T Capital, is a subsidiary of a opaque Slovak group about which much less is known.

Understanding J&T should be a fundamental part of the analysis.

An immediate consequence of “calling in” the deal is that the city’s arbitrator, the Procurement Panel, has suspended the Aug. 4 timetable for finalizing the bid.

The panel’s rules will be on hold until regulatory hurdles have been cleared.

Meanwhile, Kretinsky’s advice train is chugging along. His team is understood to be in close contact with Commerce Secretary Jonathan Reynolds, who will be keen to flesh out the firm commitments made between Kretinsky and the company.

Topics to be discussed include the Universal Service Obligation (USO), jobs, headquarters and the future role of the main employee group, the Communications Workers Union.

There are concerns that the five-year standstill will not be enough to provide a defence against the defenestration of the Royal Mail.

Kretinsky, after having established a dialogue with the union, also plans to continue negotiations.

All this is taking place against a fascinating backdrop. To regain profitability, Royal Mail needs regulator Ofcom to approve changes to the USO.

A key change would be an end to the requirement that second-class mail be delivered six days a week.

A new approach could add £300-£350m in profits to Royal Mail. That would mean Kretinsky would have to significantly increase the price of his bid.

There are important lessons to be learned from what happened in the US. One US investor based in Boston says there is a serious risk of business loss unless Ofcom acts quickly.

The U.S. Postal Service, which faces many of the same challenges, has become a problem for Washington. A private-sector competitor, UPS, has taken over the postal business by implementing better technology, logistics and tracking.

In the UK, Apollo-owned Evri (formerly Hermes) is trying to do the same with Royal Mail.

If the government really wants to stop the sale of vital overseas companies, then the best financial way to block an unwanted deal is to change the USO’s mandate.

Kretinsky, J&T and their advisers face a long and arduous road to victory.

The big question now is whether they can hold out until the end.