The UK government will sell a majority stake in Royal Mail, which it values at between £2.6billion and £3.3 billion, within the next fortnight and thus beat a threatened postal workers’
strike later next month.The government announced this morning that it will offer shares in Royal Mail at between 260pence and 330 pence each, and will sell between 40.1% and 52.2% of company shares depending ondemand. Up to 60% of shares could be sold if the offer is over-subscribed. Investors will have tobuy at least £750 worth of shares.
In addition, 10% of company shares will be given free to UK-based employees in theprivatisation, which is one of the largest and most controversial in Britain in the last twodecades.
As a result, the government will retain a minority stake of between 37.8% and 49.9% in thenear-500 year-old British postal operator. If the offer is over-subscribed, up to 60% of sharescould be sold to investors, leaving employees with 10% and the government with 30%.
These figures indicate that the UK government will raise between £1 billion and £1.7 billionfrom the share offer, or up to €2 billion if the over-allotment option is exercised.
The share offer will run until October 8 and Royal Mail shares are expected to be listed on theLondon Stock Exchange on October 11.
Business Secretary Vince Cable said: “This will give Royal Mail access to the private capital itneeds to modernise, as envisaged under successive governments and enshrined in law by Parliamenttwo years ago.” He added that the government had been encouraged by the interest shown by potentialinvestors and had thus decided to offer more shares.
Royal Mail CEO Moya Greene commented: “Royal Mail has a unique place in the UK and that will notchange as we move into the private sector. We will now be better able to compete in what is a fastchanging and intensely competitive market.”
The IPO timing means that the privatisation will have been completed before the CommunicationWorkers Union announces the result of a strike ballot on October 16, with possible industrialaction from October 23 onwards. The postal union is threatening a strike over pay and workingconditions that is also widely seen as an ‘anti-privatisation’ strike. Balloting of 115,000 CWUmembers at Royal Mail starts today.
CWU general secretary Billy Hayes said: “The government continues to press ahead with the saleof the UK postal service despite consistent opposition from the public. It seems remarkable thatthe prospectus is being issued on the same day that postal workers are being sent ballot papers forstrike action. Today’s announcement changes nothing in terms of the ballot which will go ahead asnotified.”
Earlier this week the opposition Labour Party voted at its annual conference to renationaliseRoyal Mail but party leaders reportedly said they would not be bound by the conference vote.
