The government has set out plans to privatise Royal Mail through a flotation on the London Stock Exchange in this financial year.
Business secretary Vince Cable said: “These measures will help ensure the long term sustainability of the six days a week, one-price-goes-anywhere universal postal service.”
The government intends to dispose of a majority of the existing shares, taking into account shares sold and the ten per cent of Royal Mail to be made available for free to around 150,000 eligible UK-based Royal Mail employees at the time of listing under an employee free shares offer.
The initial public offering is expected to take place in the coming weeks. Minimum application size in the Retail Offer will be £750 for members of the public and £500 for Royal Mail employees eligible under the Employee Priority Offer.
The government said it would retain flexibility around the size of the stake to be sold, as this will be influenced by market conditions at the time of the transaction, investor demand and the objective to ensure that value for money for the taxpayer is achieved.
The Post Office counters business is not included in the sale.
Moya Greene, chief executive officer of Royal Mail, said: “Our strategy is delivering a revitalised company, with a unique UK, multi-use network through which we are proud to deliver the universal postal service for all UK citizens. This network and our strong brand, coupled with the high service quality delivered by our people enable us to take full advantage of the growth in UK e-commerce to further enhance our pre-eminent parcels business. Combining this UK presence with our pan-European parcels business GLS, should result in a financial profile that combines revenue growth and margin progression to underpin strong cash flow generation.”
Royal Mail has been redefining its role to reflect the decline in the letters market and the growth of home delivery services.
UK Parcels, International and Letters (“UKPIL”) comprises the Group’s UK and international parcels and letters delivery businesses operating under the “Royal Mail” and “Parcelforce Worldwide” brands. For the year to March 2013 it had a turnover of £7.7 billion. GLS, the continental parcels delivery business had sales of £1.5bn for the same period.
