Royal Mail to be Sold to the Public in 'Tell Sid'-Style Share Offering

Strategic Insights -

The Coalition Government has confirmed plans to end hundreds of years of state ownership of Royal Mail, with a potential sale through a private share offering or public listing on the London Stock Exchange. This move is reminiscent of the Conservatives' big state privatisations of the 1980s, including British Telecom, British Airways, and British Gas. The sale is expected to be extensive, with the Government open-minded about who would buy the service or when it would be sold. Buyers could include private equity firms or existing postal service operators, such as Dutch-owned TNT.

Key Takeaways:

  • The Government plans to dispose of its 100% holding in Royal Mail through a private sale or public share offering, akin to the sell-offs of British Telecom, British Airways, and British Gas in the 1980s.
  • The state will take over Royal Mail's £8bn pension black hole, assuming the fund's future liabilities of £34bn, but gaining assets of £26bn, which may be sold off to reduce the budget deficit.
  • The Government promises to save Britain's 11,500 Post Office branches by hiving them off from Royal Mail Group into a mutual, with talks already underway with the Co-operative movement.
  • The Business Secretary, Vince Cable, stated that Royal Mail's universal service obligation, requiring it to deliver letters all over the UK six days a week for the same price, will be written into the contract of any sale.
  • Royal Mail's 150,000 staff would receive 10% of shares in any sale.
  • The Post Office could be turned into a John Lewis-style partnership, owned by its employees, or on a Co-operative basis, owned by postmasters and mistresses, staff, and even the public.

Statistics:

  • Royal Mail's pension black hole: £8bn
  • Royal Mail's future pension liabilities: £34bn
  • Value of Royal Mail assets: £26bn
  • Number of Post Office branches: 11,500
  • Number of Royal Mail staff: 150,000

Sources:

  • The Guardian: "Coalition confirms plans to sell off Royal Mail in 'Tell Sid' style share offering"
  • Business Secretary Vince Cable, as quoted in The Guardian and other sources.