The Government is lining up Donald Brydon, the chairman of Smiths Group, as the new chairman of Royal Mail with a brief to steer the company through its controversial part-privatisation.
By Mark Kleinman
Last Updated: 6:44AM GMT 23 Jan 2009
Mr Brydon's appointment is understood to be awaiting the formal approval of Lord Mandelson, the Business Secretary.
Although he has been identified as the preferred candidate for the chairmanship, it remained possible last night that Mr Brydon might not take up the job.
Friends of Mr Brydon, who chaired the market research group Taylor Nelson Sofres until its takeover last year by Sir Martin Sorrell's WPP Group, said he was "in discussions with several companies about several different roles".
If he does replace Allan Leighton, the current chairman of Royal Mail, Mr Brydon is expected to oversee the potential sale of as much as a one-third stake in the company, with the Dutch postal group TNT among the overseas competitors interested in pursuing a deal.
The decision to seek a private sector investor for Royal Mail has infuriated Labour MPs and trade unions, some of whom expressed further anger this week when it emerged that CVC Capital Partners, the private equity group, is also considering making an offer. CVC already owns stakes in postal services in Belgium, Denmark and Sweden.
Part of the unions' and MPs' anger stems from the prospect of the taxpayer shouldering a large part of the £7bn pension liability on the Royal Mail balance sheet. In a report published last month, Richard Hooper, the former telecommunications regulator, recommended the sale of a minority stake that would pave the way for investment to secure a
viable future for Royal Mail. It is not intended that the Post Office network will form part of the prospective sell-off.
CVC executives are understood to have met with officials from the Department for Business, Enterprise and Regulatory Reform earlier this week. The private equity firm has yet to decide whether to pursue a formal bid and could be hamstrung by the stipulation in Mr Hooper's report that a private sector partnership should only be struck with "one or more private sector companies with demonstrable experience in transforming a major business, ideally a network business, in circumstances comparable to those now faced by Royal Mail".
Among the new chairman's first tasks will be to forge a close relationship with Adam Crozier, Royal Mail's highly-regarded chief executive.
Mr Leighton is due to stand down in March after seven years at the helm. His tenure has seen a wholesale restructuring of the group's operations and a modernisation of working practices that has not been without controversy, including the closure of thousands of Post Office branches.
The tenure of Mr Leighton and Mr Crozier has, however, seen Royal Mail transformed from an organisation which was losing £1m a day when he joined to one which this week was able to report a profit of £255m in the nine months to Christmas.
Last night, BERR and Mr Brydon, who also chairs the London Metal Exchange, declined to comment. Royal Mail could not be reached for comment.
