U.K. Business Secretary Vince Cable will today announce plans for the sale of shares in state-owned Royal Mail Group Ltd., with 10 percent of the stock to be given to staff, according to a person familiar with the proposals.
Cable will set out the plans to Parliament this afternoon, said the person, who declined to be identified because the sale isn’t public yet. The shares for staff will be offered in two slices, half immediately and half at a later date. Ministers have always said their preferred option is an initial sale before March.
The business secretary’s statement won’t give details of the timings of the sale or the amount of money the government predicts it will raise, according to a second person familiar with the plans.
“This is a very, very large company, a big business turning over 9 billion pounds and it’s the only big business that hasn’t got any access to private capital,” business minister, Michael Fallon, told BBC Radio today. “The best chance of a successful future for Royal Mail is if it can act like any normal commercial company.”
The sale of Royal Mail will be the largest privatization in Britain since former Prime Minister John Major broke up the country’s railway in the 1990s. The 360-year-old company, one of the nation’s biggest employers with about 159,000 staff, has sought to adapt its letter-focused network to more lucrative package delivery in the face of competition from TNT NV of the Netherlands and Deutsche Post AG’s DHL Express unit.
Royal Mail’s operating profit more than doubled in the year to March 31 to 403 million pounds ($600 million) as growth in Internet shopping spurred parcel deliveries. While sales gained 5 percent to 9.28 billion pounds, parcel revenue rose 9 percent.
The opposition Labour Party’s business spokesman, Chuka Umunna, said the government is privatizing Royal Mail to help cut the budget deficit.
“We saw some fantastic profits from the Royal Mail over the last 12 months,” Umunna told BBC Radio. “We shouldn’t be selling off national treasured institutions on the cheap in some kind of fire sale, which is essentially to help get the government out of the economic hole that it has created.”
The business department appointed UBS AG and Goldman Sachs Group Inc. as joint global coordinators and joint bookrunners on May 29, Barclays Plc as joint bookrunner and sponsor, and Bank of America Merrill Lynch as joint bookrunner for the deal.
Investec Plc, Nomura Holdings Inc. and Royal Bank of Canada will take junior roles in the sale. Total fees if the deal goes ahead will be in the region of 10 to 15 million pounds, a person familiar with the plans said July 3.