Kretinsky seeks £3.6 billion takeover of Royal Mail amid EU scrutiny

In the United Kingdom, the potential acquisition of Royal Mail by Czech billionaire Daniel Kretinsky has raised significant concerns among competition regulators. Kretinsky is seeking to complete a £3.6 billion takeover of the company, which would mark the first instance of Royal Mail falling into foreign ownership in over 500 years. His business interests already encompass a majority stake in the Dutch mail service PostNL, prompting European competition authorities to investigate whether the acquisition would provide him with undue market power. Since the investigation commenced towards the end of summer 2024, regulators have been closely scrutinizing Kretinsky's business links to Russia, especially in light of the ongoing war in Ukraine and the international sanctions that have been imposed. Kretinsky, who also holds stakes in various other industries, including publishing and retail, has diminished his ties to Russia by rejecting contracts during the war. However, documents reveal that one of his firms is involved in a legal dispute with a Russian company over a coal contract. These revelations have raised flags regarding his existing connections to Russia, particularly his stake in the Slovakian pipeline EUStream, which is a crucial gas route from Russia to Western Europe. He has consistently denied any dealings with the Kremlin, but these ties have complicated the narrative surrounding his business interests. The scrutiny is akin to previous cases where the European Commission has acted firmly against mergers and acquisitions that could create monopolistic conditions. Notable instances include the blocking of a proposed £21 billion merger between the London Stock Exchange and Deutsche Börse in 2017, as well as moves against other high-profile deals in recent years. With Margrethe Vestager at the helm, the Commission has shown a clear willingness to prioritize market competition over corporate consolidation, a stance that could pose barriers to Kretinsky's ambitions regarding Royal Mail. Meanwhile, Kretinsky has reportedly engaged with the UK government, making additional concessions to facilitate the approval of his deal. Among these commitments is a pledge not to disrupt Royal Mail's pension surplus, providing some reassurance to stakeholders concerned about the long-term viability of the company and its commitments to employees. The outcome of this investigation could significantly alter the landscape of the postal and delivery sector in Europe and determine the future of one of the UK's most iconic institutions as it grapples with the pressures of foreign investment and competition regulations.