Royal Mail ‘Czech Sphinx’ stake hit by national security probe

A Czech tycoon’s plans to increase his stake in Royal Mail will be probed by the Government on national security grounds, it has been revealed.

Billionaire Daniel Kretinsky, who built his fortune through infrastructure and power assets in central and Eastern Europe, told authorities that his vehicle Vesa Equity Investment, which already owns 22 per cent of the FTSE 250 postal service, was planning to raise its stake above 25 per cent.

Dubbed the ‘Czech Sphinx’ by the City, Kretinsky has invested in other British companies including supermarket chain Sainsbury’s, and also holds a 27 per cent stake in West Ham United.

But Business Secretary Kwasi Kwarteng said the tycoon’s move to increase his holding in Royal Mail would constitute a ‘trigger event’ under the National Security and Investment (NSI) Act, which allows the Government to examine and even block deals if it thinks they raise national security concerns.

Royal Mail said it will ‘fully co-operate’ with the review while Vesa said it flagged its plans to the government ‘out of an abundance of caution’.

Shares in Royal Mail rose 1.8 per cent, or 4.8p, to 266.1p.

Kwarteng’s intervention came just days after he allowed billionaire Patrick Drahi to keep his 18 per cent share in telecoms giant BT after calling the tycoon’s stake building in for review in May.

The decision reignited concerns Drahi could make a takeover bid for BT and also raised questions about the Business Secretary’s willingness to use the powers under the NSI Act. 

Kwarteng’s assessment of Kretinsky’s stake in Royal Mail is likely to be seen as another key test.

The review comes as Royal Mail faces an ongoing battle with trade unions with around 115,000 workers set to walk out for four days in a row over pay.

Demands made by the Communication Workers Union (CWU), which were revealed by the Mail on Sunday last weekend, include hiking salaries by the rate of inflation, which has soared above 10 per cent, as well as for working hours of its members to be reduced and those aged over 55 be given lighter duties. 

Strike threat: Royal Mail faces an ongoing battle with trade unions with around 115,000 workers set to walk out for four days in a row over pay

The union has also rejected a previous offer from Royal Mail of a 2 per cent standard pay rise, with the potential for 5.5 per cent if certain ‘changes’ to working practices were agreed upon.

The dispute has taken a dramatic turn after the company threatened to rip up an agreement signed with the CWU in 2013. 

The contract, made when Royal Mail was privatised, restricts it from employing new workers on different terms to existing staff as well as outsourcing, making compulsory redundancies or using temporary workers.

But management view the contract as a barrier to making vital changes at the firm and are collecting evidence that will allow them to trigger a break clause in the agreement, the Telegraph reported. 

Bosses have previously stressed Royal Mail needs to make changes to its business in order to compete with rivals such as Amazon.

Earlier this month, the group warned it would be ‘materially loss-making’ in this financial year as a result of the strikes after having previously admitted it was haemorrhaging the equivalent of £1million in losses every day.

The company has also threatened to break up its business if the crisis worsens.