Royal Mail is a critical national asset for Britain

Selling the business to a Czech billionaire would be extraordinary and threaten the integrity of the service

‘Have we forgotten the critical role that posties played in getting Covid tests to people?’

Royal Mail is no stranger to losing things in the post, but a £3bn takeover bid from a foreign billionaire must surely be a new low.

It took eight long days for news of Daniel Křetínský’s approach for parent group International Distribution Services to reach shareholders. Even then it was only because someone impatient leaked the Czech’s overtures to the press. Not a great start for Keith Williams, a Royal Mail chairman more used to butting heads with unions than resisting takeovers.

If the board is determined to avoid the clutches of someone that already owns 27pc of the company then it needs to up its game. Faced with a serious threat to its independence, Royal Mail has no room for complacency. Now that Křetínský’s plans are firmly in the public domain, a debate can start about the merits – or otherwise – of allowing another critical national asset to fall into foreign hands.

It would be an extraordinary move even for a country that has such a lousy history of repeatedly allowing overseas investors to pick off our most important infrastructure with little thought for the consequences for the wider national interest.

The decline of Thames Water in the hands of a succession of unaccountable foreign owners should serve as a reminder of the consequences of adopting a naive “help yourself ” approach to foreign acquirers. In its hour of need, Britain’s largest utility has been abandoned by its shareholders, among them several giant pension funds that pose as “patient capital”.

It is therefore all on Křetínský to demonstrate why he should be allowed to own and control one of the UK’S oldest businesses and most vital services. The statement that his EP investment group fired off yesterday is unlikely to help his cause. Talk about how Royal Mail “would benefit from being able to take a longer-term view” is so vague as to be rendered meaningless. Ditto the suggestion that Křetínský is “prepared to support this iconic business as it transforms and rebuilds into a modern postal operator”.

He will need more than flattery and corporate flim-flam, at the very least including a binding pledge to step up investment at the Royal Mail beyond current levels. Otherwise, the board can easily make the case for remaining on the London Stock Exchange and forging ahead with its own turnaround plans rather than submitting to Křetínský’s “opportunistic” approach.

True, negotiations over a possible relaxation of the Universal Service Obligation (guarantees nationwide letter deliveries six days a week) at least appear to have hit a dead end. The Government’s rash decision to rule out change despite an ongoing Ofcom review provided Křetínský – nicknamed “the Czech Sphinx” – with a chance to pounce.

Even the offer price is way off what would be needed for the board to open negotiations. Křetínský’s 320p-a-share bid may look generous given that it represents a 50pc premium to the 214p level that Royal Mail’s shares were trading at the day before his move was flushed out. But set against a threemonth average of 250p and the uplift shrinks to a measly 25pc. Most relevant of all is the 330p price at which the Treasury floated the company on the stock market in 2013. When it went public, 700,000 retail investors bought shares.

The prospect of those who have stayed the course, despite Royal Mail’s dwindling fortunes, being left out of pocket is not one that any Government ought to contemplate. That goes for either a Conservative Party losing power, or a Labour administration that has just taken office. Even if Rachel Reeves and friends are desperate to cosy up to business to deliver investment, they will not be able to.

There must be doubts, too, about the party’s appetite for a war with the powerful Communication Workers Union, which represents a large proportion of the Royal Mail workforce and has already said it is opposed to foreign ownership. So anonymous briefings that the Opposition plans to give its blessing should be taken with a large pinch of salt.

Perhaps the biggest concern about a Royal Mail takeover is that a suitor would seek to separate the growing parcels arm GLS from the rapidly dwindling Royal Mail letters service. With the former heavily subsidising the latter, a break-up may be compelling on paper. The temptation for Křetínský is likely to be even greater: he owns 30pc of Dutch parcels operator Postnl and GLS is based in the Netherlands.

Labour may see a split as an opportunity to renationalise the Royal Mail, convinced that the state would make a better fist of reviving it. But shorn of the cross-subsidies that a highly profitable parcels operation provides, mounting losses from letter deliveries risk being immediately thrust onto the taxpayer. It’s worth noting that the second largest shareholder, Redwheel, has said that GLS alone is worth 350p per share.

Křetínský’s interest must be subject to a fresh national security review. The 48-year-old has already passed one such test when his stake went over the 25pc mark, despite the obvious risk that a shareholder surpassing such levels is able to exercise creeping control over important decisions.

There are also lingering questions about his ties to Russia. Křetínský’s investments in the energy industry include EP Infrastructure, which owns part of Eustream, a company that operates the gas-transmission system that enables Russian gas to be piped to central and eastern Europe.

But the burning issue is not really whether Křetínský is a suitable buyer or not, it’s whether we are prepared to allow the Royal Mail to be sold at all.

Letters may be of diminishing importance, but it is still responsible for the delivery of 7bn pieces of mail a year – many of them important documents such as NHS appointments, benefits appeals and parking fines.

Selling it to private money would raise serious questions about the integrity of the network and service, threatening our national resilience. Have we forgotten the critical role that posties played in getting Covid tests to people during the pandemic?

A country that cannot get something as basic yet fundamental as its postal service right cannot expect to be taken seriously. Křetínský is weighing up an improved bid, but even though Royal Mail has plenty of experience of Czechs in the post it’s hard to see how this one won’t be bounced.