Vince Cable urges Labour to dam Royal Mail takeover bid

Labour has been warned this weekend not to wave through the debt-fuelled £3.6 billion bid for Royal Mail, by former Business Secretary Vince Cable, the architect of the privatisation of the postal service a decade ago.

Cable said Ministers should be cautious about the bid from Czech tycoon Daniel Kretinsky because of the high level of debt and his links to the Kremlin.

The intervention by the former Lib Dem Minister carries weight because Cable was in charge of privatising Royal Mail in 2013 under the Coalition Government. He sold it for £3.3 billion, or £3.30 a share, in a deal that saw it listed on London’s stock market.

‘It is very sensible to be concerned about Kretinsky’s bid,’ Cable told The Mail on Sunday. ‘The debt-fuelled offer and his Russian connections should give Ministers pause for thought.’

Cable, 81, faced fierce criticism 11 years ago when he was accused of agreeing to a flotation price that undervalued the business. Shares climbed in the wake of privatisation, reaching a record high of nearly £6.07.

Chuka Umunna, then Shadow Business Secretary, said the group had been sold ‘on the cheap’. The former Labour MP has since acted as an adviser to Kretinsky.

The shares closed this weekend at £3.59, valuing the business at £3.43 billion, a fraction above the original sale price Cable arranged more than a decade ago.

Cable indicated that he did not think Kretinsky’s £3.6 billion swoop on the firm was too low, saying: ‘This offer is fractionally up on the original sale price of £3.3 billion. If it’s undervalued where are the other bids?’

However, when asked if he had expected a takeover like Kretinsky’s when he sold Royal Mail, Cable said: ‘We envisaged long-term institutional shareholders.’

Cable has repeatedly defended the sale price of Royal Mail, which has mounting problems. It posted a loss of £138 million for the six months to September 29.

In January last year, the former Minister said the decision to sell the shares at £3.30 had been ‘long since vindicated’, and that the coalition Government ‘got as good a deal as we could get’.

Kretinsky, who is dubbed the Czech Sphinx for his inscrutability, made his fortune in the energy sector. He is the largest investor in Royal Mail’s parent company International Distribution Services (IDS) with a 28 per cent stake.

He made an audacious swoop on Royal Mail earlier this year with a £3.6 billion offer.

If he succeeds, the firm will fall into foreign hands for the first time in its 508-year history.

But the bid has been highly controversial, with Kretinsky having already made concessions to the Labour Government.

He has agreed to maintain the firm’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 staff pension scheme.

While the bid still needs to pass a Government investigation under the National Security and Investment Act, Ministers are expected to wave through the takeover in the coming weeks.

Last month, Business Secretary Jonathan Reynolds appeared to shrug off concerns about the tycoon’s impending takeover, saying Kretinsky was a ‘legitimate business figure’.

But worries about the billionaire’s plans and his international business ties persist.

In 2021, EP Group, the holding company for Kretinsky’s business empire, signed an £823 million financing deal with a syndicate of banks that included Beijing-owned Bank of China.

Accounts for EP also revealed that one of his commodity trading firms is in a £174 million dispute with a Russian firm after it did not fulfil a coal contract when the war in Ukraine began.

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

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