The British government yesterday officially launched plans to privatize more than half of Royal Mail, saying an initial sale of shares in the state-run postal service would occur within weeks.
“Her Majesty’s Government today announces its intention to proceed with an initial public offering of Royal Mail,” said a joint statement, which added that the initial public offering was “expected to take place in the coming weeks.”
Royal Mail is to list on the London Stock Exchange, while the coalition government said it would “retain flexibility around the size of the stake to be sold.”
The government had in July announced plans to privatize more than 50 percent of Royal Mail following a major restructuring of the organization in recent years, triggered by fierce competition from e-mail.
Royal Mail is expected to be Britain’s biggest privatization since the 1980 sell-offs of former nationalized giants British Gas and British Telecommunications.
Media reports say the part sale of Royal Mail could be worth up to ￡3 billion (US$4.74 billion). The government previously said that it would take on Royal Mail’s historic pension deficit.
About 150,000 staff will be eligible to get a free stake in the business under Britain’s largest employee share scheme of any major British privatization for almost 30 years.
The government has argued that partial privatization would allow Royal Mail the freedom to raise capital, continue modernizing and meet booming demand for online shopping delivery.
Royal Mail recently enjoyed a surge in annual profits thanks to the increasing popularity of online shopping, which generates parcel traffic, and also to deep cost-cutting and big increases in stamp prices.
The coalition government relaunched plans to part-privatize Royal Mail three years ago after the proposal was ditched by the former Labour Party administration.
The government scrapped the sell-off plans in 2009 as Britain struggled with recession following the global financial crisis.
Royal Mail continues to operate most British postal services, even though its more than 350-year monopoly of the letter-delivery business ended in 2006.