Royal Mail’s last hope for salvation lies in… Brussels

Royal Mail could be saved from a predatory takeover bid from Daniel Kretinsky by European Union competition watchdogs, The Mail on Sunday can reveal.

The investigation by EU authorities comes at a time when investigations into the Czech billionaire’s business ties with Russia are intensifying.

Kretinsky, 49, wants to take over the company in a £3.6 billion deal. If he succeeds, Royal Mail would fall into foreign hands for the first time in its 508-year history.

It is believed the Labor government is likely to approve the deal in the coming weeks. However, the European competition authorities – whose investigation began at the end of this summer – will take a much tougher stance.

Kretinsky already has a majority stake in the Dutch postal service PostNL.

The European Commission is investigating whether a takeover of Royal Mail, combined with its interests in the Netherlands, would give it too much market power.

Some experts believe Kretinsky – nicknamed the Czech Sphinx for his inscrutable attitude – wants to combine PostNL with Royal Mail’s hugely profitable European parcel division, GLS.

A competition lawyer told The Mail on Sunday: ‘The UK regulators are just one piece of the puzzle. The European Commission really has teeth, and I think Kretinsky and his team will secretly be more concerned about that.’

The EU investigation comes amid growing concerns about Kretinsky’s connections to Russia.

Accounts from EP Group, the holding company of his business empire, show that one of his commodities trading firms is in a £174 million dispute with a Russian company after it defaulted on a coal contract when the war in Ukraine began in 2022.

The trading house EP Resources refused to buy coal from the Russian company, in accordance with international sanctions.

However, the legal wrangling shows the extent of Kretinsky’s Russian ties.

The dispute is subject to arbitration, and the EP Group has warned that the outcome is impossible to predict.

Kretinsky, who has a stake in Slovakia’s EUStream pipeline, one of Russia’s main gas routes to Western Europe, has always downplayed his ties to the country, which is now an international pariah. He insists he does not buy gas from Russia and does not do business with the Kremlin.

Business Minister Jonathan Reynolds last week described him as a “legitimate” businessman.

Under the leadership of the hard-line Margrethe Vestager, the European Commission has blocked a series of high-profile mergers and acquisitions in recent years.

In 2017, the EU ended the £21 billion partnership between the London Stock Exchange and its German rival Deutsche Borse, after Vestager said it would create a “de facto monopoly”.

Last year the Commission stepped in on Illumina’s deal with cancer screening start-up Grail, and also tried to block the takeover of smaller rival Figma by US software company Adobe.

Analysts believe the Commission could force Kretinsky to divest assets or block the deal altogether.

He also owns book publishers and magazines, as well as interests in the football clubs Foot Locker, Sainsbury’s and West Ham United.

Last week it was revealed that Kretinsky had made additional concessions with the Labor government to allow the deal to go through. Kretinsky previously agreed to maintain the postal worker’s universal service obligation, which requires him to deliver letters six days a week.

Other obligations include not touching the surplus in Royal Mail’s pension scheme.

Kretinsky wants to modernize Royal Mail and capitalize on the growth of e-commerce.