Last hope of Royal Mail rescue lies in… Brussels

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

The investigation by EU authorities comes as scrutiny of the Czech billionaire’s business links to Russia intensifies.

Kretinsky, 49, wants to snap up 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.

The Labour Government is thought to be likely to wave through the deal in the coming weeks. However, European competition authorities – whose investigation began at the end of the summer – are set to take a much harder line.

Kretinsky already owns a majority stake in Dutch mail service PostNL.

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

Bidder: Czech billionaire Daniel Kretinsky

Some experts believe that Kretinsky – nicknamed the Czech Sphinx for his inscrutable demeanour – is aiming to combine PostNL with Royal Mail’s hugely profitable European parcels arm GLS.

A competition lawyer told The Mail on Sunday: ‘The UK regulators are just one bit of the jigsaw. The European Commission really has teeth and I think Kretinsky and his team will secretly be more worried about them.’

The investigation by the EU comes amid rising concerns over Kretinsky’s connections to Russia.

Accounts for EP Group, the holding company for his business empire, reveal that one of his commodity trading firms is in a £174 million dispute with a Russian company after it did not fulfil a coal contract when the war in Ukraine began in 2022.

The trading house EP Resources refused to buy coal from the Russian firm in line with international sanctions.

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

The dispute is in arbitration and EP Group has warned the outcome is impossible to predict.

Kretinsky, who owns a stake in the Slovakian pipeline EUStream, one of the main gas routes from Russia into Western Europe, has always played down his ties to the country, now an international pariah. He insists he does not buy gas from Russia or have dealings with the Kremlin.

Business Secretary Jonathan Reynolds last week described him as a ‘legitimate’ businessman.

Under the hard-nosed Margrethe Vestager, the European Commission has in recent years blocked a string of high profile mergers and acquisitions deals.

In 2017 the EU put a stop to the £21 billion tie-up 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 waded in on Illumina’s deal for cancer screening start-up Grail and also moved to block US software company Adobe’s acquisition of smaller rival Figma.

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

He also owns book publishers, magazines and French newspaper Le Monde, as well as stakes in New York department store Macy’s, Foot Locker, Sainsbury’s and West Ham United football club.

Last week it was revealed that Kretinsky had agreed extra concessions with the Labour Government for the deal to be waved through. Kretinsky has previously agreed to maintain the post carrier’s universal service obligation, which requires it to deliver letters six days a week.

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

Kretinsky wants to modernise Royal Mail and capitalise on the growth of ecommerce.