in the back

Czech's in the post
Royal Mail, Issue 1625
kretinsky.jpg
CUTTING CREW: Daniel Kretinsky's EP Group is cutting thousands of jobs at a supermarket chain it has taken over
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.

More top stories in the latest issue:

PAULA'S PATCHY MEMORY
A tearful Paula Vennells gave a masterclass in how not to run an organisation during her appearance at the Post Office inquiry.

POST-UNTRUTHS
The government has told porkies over the significant role in the Post Office IT scandal played by Tory donor Simon Blagden.

BIRD TURDS OF THE WEEK
The Office for Environmental Protection has brushed off the failure to address pollution of the Wye from intensive poultry farming without even investigating.

PFI PERIL
The dangers for police forces whose premises are maintained under PFI deals have been highlighted in the case of a terrorist who was being interviewed.

AID MEMO
A government watchdog has said the UK is among countries not doing enough to call out Israel on blocking road access for food aid deliveries into Gaza.

DINNER DATA
Lord Mandelson's lobbying firm was instrumental in putting a controversial US tech firm in touch with NHS bosses before it won contracts.

IRE ALARM
The Commons home affairs select committee has laid out the depressing findings of its full report into the toxic culture in fire and rescue services.

MINOR SCANDAL
Examiners at music and performing arts exam board Trinity College London have raised concerns about the charity's practices overseas.

To read all these stories in full, please buy issue 1625 of Private Eye - you can subscribe here and have the magazine delivered to your home every fortnight.

Next issue on sale: 19th June 2024
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