Daniel Kretinsky, the Czech Sphinx who wants to take over Royal Mail, learned his trade in the turmoil that followed the lifting of the Iron Curtain.
The Velvet Revolution of 1989 occurred in his formative years as a teenager. When he was young, he watched and learned how a new generation of capitalists in Eastern Europe took advantage of the opportunity to make great fortunes by purchasing previously state-owned assets.
He then built a multibillion-pound fortune by acquiring dirty energy assets from companies trying to go green, an activity that earned him a less flattering nickname like “fossil hyena.”
Any highly successful scavenger is, by definition, an opportunist who sees potential benefits that others overlook. So what could Kretinsky see in Royal Mail?
Firstly, there is value to unlock if the Government finally gives the green light to reform the Universal Service Obligation which requires Royal Mail to deliver to all UK addresses six days a week.
Uncertain future: the Government could block the agreement for reasons of national security
The leadership team of CEO Martin Seidenberg and President Keith Williams has, conveniently, laid the groundwork in this regard.
Kretinsky would benefit from savings of up to £300m if his bid is successful.
Kretinsky could sell GLS, the profitable Netherlands-based parcel business, which would be worth more if it were freed from the weight of Royal Mail. His camp has hinted that this is not in the cards, but given that he stated a year ago that it is not intended to bid for Royal Mail, perhaps this should not be given unlimited credit.
As an astute property investor with a mansion in north London and a townhouse in Paris, he will also be keeping an eye on Royal Mail’s £1.4bn of property assets.
These include the Mount Pleasant site in the heart of the capital, which is still used to sort letters but could be redeveloped as luxury apartments.
It’s easy to see what Kretinsky could gain, but not so much for the rest of us.
The Government could block the deal on national security grounds, but Business Secretary Kemi Badenoch says she will simply seek assurances from Kretinsky on key services.
In several episodes in the past, such promises have not even been worth the paper on which they were written.
The Labor Party, whose former business secretary turned banker Chuka Umunna is advising Kretinsky, has also written to the tycoon asking for promises.
All of which sounds like hot air in front of the Sphinx’s steamroller. If a company can truly be managed better under new ownership, then an acquisition can be good news for long-term stakeholders.
This is not the case at Royal Mail, where new chief executive Martin Seidenberg had a compelling plan for the company. Kretinsky seems to simply be snatching the fruits of that for himself.
It is a shame that the Royal Mail board gave up and recommended the offer. Past experience tells us that when presidents and CEOs decide to fight back against a bidder, they can win. Even if a defense fails, putting up a good fight can make the difference.
The watershed case came in 2010 at chocolate maker Cadbury, where chairman Sir Roger Carr finally had to succumb to a takeover by Kraft.
But it was a brave defeat – and the enthusiasm with which Carr entered the battle, coupled with Kraft’s broken promises – led to a revamp of procurement rules to guard against unscrupulous raiders.
Fourteen years later, it seems the lessons of Cadbury’s famous offering need to be relearned.
