Britain confirms plans to privatize Royal Mail
Stock offering expected within weeks
9/12/2013LONDON — The U.K. coalition government has confirmed plans to privatize the country’s 500-year-old Royal Mail this fall.
Business Secretary Vince Cable said today an initial public offering of a majority stake in the postal service was scheduled for the coming weeks.
Officials say the expected stock sale will be open to members of the public as well as to larger institutional investors. The minimum investment will be set at 750 pounds ($1,185) with Royal Mail employees getting a slice of the stock offering.
Plans call for 10 percent of the stock to be given to U.K.-based Royal Mail employees, with 41 percent to be sold to the public, including institutional investors.
Cable said the announcement marks the third and final part of the reforms agreed in Parliament two years ago.
“These measures will help ensure the long-term sustainability of the six-days-a-week, one-price-goes anywhere universal postal service,” he said, predicting a “healthy future” for the company.
Business minister Michael Fallon said the privatization is the “final step” toward modernizing the business and opening the door toward investment. He said there is “sufficient” interest from potential investors to justify the sale.
The government did not provide details about how the stock will be priced at the initial public offering.
Even as the announcement of the IPO was made, the Communications Workers Union was planning to ballot workers for possible strike action. The union is opposed to the stock plan because of fears of potential job losses.
There are concerns the threat of industrial action may damp demand for the stock.
But Britain’s government is determined to move forward, describing the privatization as critical to the future of Royal Mail, which has seen its revenues shift more toward packages and away from the mail of the past.
The privatization spells a major change for the long-established mail service.
Its familiar red pillarboxes will be protected by law, but tampering with a service so central to public life is also a delicate matter.
Even the late Margaret Thatcher, who championed the sale of state-owned companies such as British Telecom and British Gas, backed away from privatizing Royal Mail during her tenure as prime minister back in the 1980s.