US Edition TNT's desire to gain control of General Logistics Systems (GLS), which is headquartered in Amsterdam, was contained in an outline plan submitted to the Government in recent weeks, according to people familiar with the Dutch company's bid.
Insiders said this weekend that ministers were unhappy with the valuation attached to Royal Mail in TNT's proposal and warned that the board of Royal Mail would not willingly surrender control of GLS, the European parcels operation that is viewed by the company as critical to its growth prospects. The impasse could threaten Government plans to secure a sizeable external investment in Royal Mail.
TNT's proposed offer is understood to have fallen well short of the £3bn valuation that ministers are thought to be attaching to a 30pc stake in Royal Mail. The Dutch group is facing its own financial difficulties and earlier this month reported that recessionary pressures were hurting its performance.
Among the other conditions proposed by TNT is a demand to have the ability to install several of its executives on the British company's board. Another is that it would have significant influence over all boardroom decisions.
The scale of TNT's demands is understood to have alarmed ministers, who are already facing a furious backlash from backbench Labour MPs and trade unions who have vowed to block efforts to sell a minority stake in Royal Mail to an overseas competitor.
This week, the Bill containing proposals to pave the way for a restructuring of Royal Mail's ownership will pass its first and second report stages before it receives its third reading in the House of Lords later in the month.
GLS, which employs 14,500 people and handles more than 1m parcels every day, is viewed by analysts as the jewel in Royal Mail's crown.
TNT is understood to be keen to integrate GLS with its own parcels business, a move that would effectively mean Royal Mail losing control of the operation.
As part of the Government's proposals to offload a minority stake in Royal Mail, which are being led by Lord Mandelson, the Business Secretary, it has pledged that the taxpayer will take on the company's vast pension deficit. An actuarial valuation, which is under way and is likely to report back by the end of the summer, is likely to show that the deficit now tops £9bn.
This weekend, it emerged that the Government was planning to account for the £24bn of assets in Royal Mail's pension scheme as a one-off windfall on its books, a move criticised by John Ralfe, one of Britain's leading pensions experts, as "a huge fiddle".
Although a number of other parties also expressed initial interest in acquiring a stake in Royal Mail, only CVC Capital Partners, the private equity group, has tabled a formal proposal to ministers. CVC's offer has been crafted in conjunction with De Post-La Poste, the Belgian post office, in which it is a major shareholder.
Lord Mandelson has also been urged to consider a so-called "John Lewis-style" solution that would see Royal Mail's employees given shares in the business.
TNT is being advised by Goldman Sachs, UBS is advising the Government and Rothschild has been hired to advise Royal Mail. All of the parties declined to comment.