Taxpayer will be at risk if the Royal Mail deal goes horribly wrong, says ALEX BRUMMER
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Among the more bizarre aspects of the deal carved out by Czech billionaire Daniel Kretinsky with the Government and Royal Mail is the use of a ‘golden share’. Such shares protect strategic assets from foreign marauders. Among FTSE 100 companies, Rolls-Royce and BAE both enjoyed this protection.
It has been argued that golden shares depress the market value of assets because they make firms bid-proof and complacent. Anyone plugged into the leadership of ‘Turbo’ Tufan Erginbilgic at Rolls-Royce knows that is not the case. His transformation has delivered a doubling of the shares over the last year.
Business Secretary Jonathan Reynolds’ deployment of the golden share at Royal Mail amounts to a gimmick designed to get a poor deal for Britain, citizens and shareholders over the line. Golden boy: Czech billionaire Daniel Kretinsky has been given the green light to buy Royal Mail in a £5.3bn deal.
Instead of the golden share being used to protect a vital strategic asset from overseas plunder, it is being used to catapult Kretinsky into the driving seat. A new golden share will be created which requires the Czech tycoon to keep the Royal Mail headquarters in Britain and to pay its taxes here. HQs are the first thing to go in takeovers.
There are questions as to how robust such a requirement proves. The HQ of Britain’s tech champion Arm remains in Cambridge. But command and control rested with its biggest shareholder Softbank in Tokyo. A UK revenue system, which favours debt over equity, will allow Kretinsky and his team to offset a big interest rate obligation, on a highly leveraged deal, against tax.
