Czech's in the post
Royal Mail, Issue 1625 THE proposed takeover of Royal Mail owner International Distribution Services (IDS) by Czech billionaire Daniel Kretinsky looks ominous for posties, to judge by his recent record.

No sooner had his EP Group taken over another troubled business, French supermarket operator Casino, than in April it announced "up to 3,267" job losses in what unions there called a "social disaster".

Serious responsibility
Kretinsky, who made most of his money in mining and energy and specialises in "dying" industries, has sought to reassure.

He professes "the utmost respect for Royal Mail's history and tradition" and awareness that "owning this business will come with enormous responsibility – not just to the employees but to the citizens who rely on its services every day". According to him, "the scale of the commitments we are offering to the company and the UK government reflect how seriously we take this responsibility".

The detail of the planned deal itself tells a less comforting story.

Brief respite
The putative new owners have indeed made several key commitments: to meeting the Royal Mail's "universal service obligation" (delivering letters to all addresses six days a week); not to asset-strip; to retain the Royal Mail name; to stay UK tax resident; to comply with regulator Ofcom's reporting requirements; not to extract surpluses from the pension fund; and to recognise unions.

But these last only for what is called the "relevant period" of, er, five years. For an organisation with a 500-year history, it's hardly securing the future.

And with standards already having plummeted since privatisation as mailroom staff are forced to prioritise more profitable parcels over letters, with little comeback from toothless Ofcom, confidence cannot be high.

Trebles all round
So what did persuade the IDS directors to recommend to shareholders a sale that will be executed via a special company owned jointly by Kretisnky's Luxembourg-based EP Group (56 percent) and his sidekick Patrik Tkac's Cyprus-controlled J&T Private Equity Group Ltd? Could it have anything to do with the bonanza it means for... the IDS directors?

The price for the sale will be 360p per share, or a premium of 73 percent on the price before the offer period began. For chief executive Martin Seidenberg and outgoing finance director Mick Jeavons, this is likely to mean a significant boost to bonuses based to a large degree on "total shareholder return" (ie dividends and share price increase).

The pair will also be able to cash in their own shares (both hold around half a million subject to performance) for considerably more than they were worth beforehand.

Needless to say, the banks are supping again at the Royal Mail trough. Advising IDS on the sale are Barclays, Merrill Lynch and Goldman Sachs – all of which helped the coalition government flog the company in the first place.