The Government left Royal Mail vulnerable to predators by delaying postal service reforms, senior company officials believe.
Royal Mail owner International Distributions Services last week rejected a £3.1bn takeover proposal from Czech billionaire Daniel Kretinsky as “opportunistic”.
Kretinsky, nicknamed the “Czech Sphinx” for his inscrutable nature, is already IDS’s largest shareholder with a 27 percent stake.
Czech Sphinx: International Distributions Services last week rejected a £3.1bn takeover offer from Daniel Kretinsky
You have until the middle of next month to submit a formal offer or withdraw.
If Kretinsky makes a formal bid, private investors, including Royal Mail’s army of officials, could play a key role in the outcome as they hold 21 per cent of the shares between them, a legacy of the company’s privatization. in 2013.
Royal Mail, which faces intense competition from rival carriers, recently proposed that it should be allowed to deliver second-class letters just three times a week instead of six in a bid to cut costs and save its first-class service.
The plan would reduce the burden of the so-called Universal Service Obligation (USO), which means Royal Mail must deliver letters to addresses across the UK for the same price every day except Sunday. Company bosses have repeatedly lobbied ministers to relax the USO, but to no avail.
They have raised serious concerns about the future of the service if industry watchdog Ofcom does not act quickly to introduce reforms by April 2025.
“It is notable that after four years of talks with the government about the USO there has been no change,” a Royal Mail source said.
The delay “puts us in a vulnerable spot,” the source added, referring to Kretinsky’s inclination.
“The quicker the reforms, the better,” the source said.
Kretinsky, 48, has extensive energy interests, including a stake in the largest transporter of Russian gas to Europe, as well as investments in West Ham United and Sainsbury’s.
It is understood he was encouraged to bid directly for Royal Mail after raising his stake above 25 per cent without causing any national security concerns in Whitehall.
However, experts say it faces much stricter scrutiny if it wants to own Royal Mail outright.
Politicians and unions oppose Kretinsky’s bid to buy the 500-year-old company founded during the reign of Henry VIII.
They fear that another “national treasure” could fall into foreign hands and be dismantled.
Staff at Royal Mail, which owns around six per cent of the company, “will certainly be motivated to stand up and be counted” in the event of a bid, said Amit Vedhara of shareholder group ShareSoc.
The Communications Workers Union, which represents Royal Mail workers, wants to renationalise the service, saying foreign ownership “cannot be right”.
Kretinsky’s offer is just shy of the 330 pence per share investors paid when Royal Mail went public in 2013.
The offer “disenfranchises 700,000 ordinary people who became retail shareholders” at the time, said Sheryl Cuisia of campaign group The Engagement Appeal.
“It is unfair that these loyal investors now face losses while another national asset is at risk of being acquired by foreigners,” he added.
Letter volume has fallen from a high of 20 billion a year two decades ago to around 7 billion and is likely to fall to around 4 billion in the next five years.
Royal Mail’s plans, which have not yet been approved by Ofcom, would mean daily delivery routes would be reduced by between 7,000 and 9,000 over two years, saving up to £300m with a loss of up to 1,000 jobs. Royal Mail lost £319 million last year.
Last night a source close to Kretinsky dismissed claims that he would try to split up IDS, which also includes the profitable GLS logistics business.
Kretinsky’s offer was “not dependent” on the outcome of the USO talks and he looked forward to continuing “constructive engagement” with the IDS board, the source added.
Experts said other delivery groups such as Amazon or InPost could also come into play now that Royal Mail is effectively “in play”.
IDS declined to comment.