The British government has sold half of its remaining 30% stake in Royal Mail plc to institutional investors for £750 million under its plan to fully privatise the postal group.
The government sold the 15% stake for 500 pence per share yesterday, and now owns only 15% of Royal Mail, while investors own 75% and employees 10% of shares. The sale comes only one week after Chancellor George Osborne announced plans to fully dispose of the remaining holding for about £1.5 billion to help reduce government debts.
The government said that following independent financial advice it decided that yesterday (10 June 2015) was a good opportunity to realise value for money from a sale of part of its remaining shareholding in Royal Mail. The shares were sold through an accelerated bookbuild which enabled it to take advantage of the current favourable market conditions.
Business Secretary Sajid Javid commented: “This sale has raised £750 million and represents good value for taxpayers. That money can be used to reduce public debt, which is how we will deliver lasting economic security for working people.
“Royal Mail has demonstrated that it can thrive in the private sector. It now has the ability to access the funds it needs to ensure that it has a sustainable future and can adapt to the changes in the postal market,” he added.
The Chancellor, George Osborne, said: “We want to help the Royal Mail attract more investment and serve its customers, and use the money we raise in return to pay down the national debt. And we’re also going to make sure that there is a special bonus for the workforce who have done such a great job turning Royal Mail around. Thanks to them, Royal Mail’s share price has risen; so we’re going to give more of the shares to the staff.”
Building on the success of the initial scheme, and in recognition of their work in turning around the Royal Mail, the Chancellor announced that the government intends to gift up to 1% of the shares of the company to Royal Mail’s UK employees. These shares will come from government’s remaining holding and they will be subject to sales restrictions. This builds on the 10% of the total shares in the company that were awarded to Royal Mail employees as part of the 2013 flotation.
In response to the share sale, the postal union CWU criticised the government for ‘rushing’ the sale and ignoring public wishes.
General secretary Dave Ward said: "This is clearly a further demonstration of the Government's total disregard for a public voice in the company, and it brings to the fore the very real threat to the continuation of daily delivery services and the Universal Service Obligation." He reiterated that the union “will defend our members' terms and conditions by all means necessary".
