The Chancellor has expressed concern about the proposed takeover of Royal Mail by a billionaire nicknamed the “Czech Sphinx”, in a sign that a deal could be blocked.
As analysts suggested tycoon Daniel Kretinsky would have to increase his bid for the postal group to more than £4bn, Jeremy Hunt said there were “lessons” to be learned from the tangled mess at Thames Water.
Asked about a foreign takeover of Royal Mail owner International Distributions Services (IDS), he said: ‘Do I look at what happened to some of the water companies and say we shouldn’t learn any lessons? Absolutely not.
“We need to make sure companies are regulated in ways that ensure that what happens to the bottom line doesn’t harm the public services we all depend on.”
Speaking on the sidelines of International Monetary Fund meetings in Washington, Hunt added: ‘At the same time, we must also ensure that we continue to attract international investment.
Debt fears: Asked about a foreign takeover of Royal Mail, chancellor Jeremy Hunt (pictured) said there were “lessons” to be learned from the tangled mess at Thames Water.
This must be done in a transparent and open way so that investors know exactly what they are looking for and can depend on consistency in the approach taken by the State.’
The Treasury is currently grappling with efforts to rescue Thames Water, which has 16 million customers in the south of England and is struggling under the weight of £18 billion of debt.
Thames Water was sold to German company RWE in 2001 and later auctioned to Australian giant Macquarie, nicknamed the “vampire kangaroo”, in 2006.
It is now owned by a consortium of shareholders, including sovereign wealth funds from China and Abu Dhabi, and pension funds from Canada and the United Kingdom.
Although Hunt did not say ministers would block foreign ownership of Royal Mail, his reference to Thames Water highlights the government’s sensitivity around such a deal.
The unions have already come out strongly against a takeover, although there are suggestions that the Labor Party is open to the idea.
IDS revealed this week that it has already rejected a bid from West Ham United co-owner Kretinsky worth 320p per share, or £3.2bn.
But the Czech tycoon, who has a 27.6 per cent stake in the company and is also a major investor in Sainsbury’s, is now understood to be preparing a higher offer.
Analysts at investment bank JP Morgan said the company deserves a valuation of £4.2 billion, or 441 pence per share.
But experts have warned that a deal could be reached under the National Security and Investment Law, which allows the Government to block the acquisitions.
Ministers allowed Kretinsky to increase his stake in Royal Mail when it passed the 25 percent threshold in 2022.
But one prominent analyst, who asked not to be named, said clearance would be needed for a full takeover.
“Ironically, a precedent was set in 2022 when Kretinsky requested prior approval to increase his stake above 25 percent,” the analyst said.
‘The Government chose not to block that. But a full takeover would be a different matter.’