U.K. Postal Service to Become Publicly Traded Company

Royal Mail box
Royal Mail box

In a move that even late Prime Minister Margaret Thatcher didn't care to try, the United Kingdom's postal service, the Royal Mail, is going to become a public company. The resulting company likely will be valued at between $3 billion and $4.5 billion. It will be the largest privatization in the U.K. since the railroads were floated in the 1990s.

The number of shares to be issued to the public has not yet been set, and likely will be determined by market conditions, overall demand for the shares, and the value a public offering will bring to British taxpayers.

The Royal Mail employs 150,000 people and they will be eligible to receive a 10% stake in the new company at no cost at the time of the initial public offering, according to a report in the Financial Times.

The country's business secretary told the FT:

The key objective of our reforms to the postal market is to protect the one price goes anywhere, six days a week service that businesses and communities throughout the country rely upon. ... To do that Royal Mail needs future access to private sector capital because the postal market is changing; the number of letters we send is declining, while the number of parcels is growing as online shopping becomes more popular. Royal Mail is competing with other postal operators, as well as the internet, smart phones and tablets.

Not everyone supports the plan, which was developed by the ruling Conservative party. The Labour party calls the idea a "fire sale," and the union representing employees has threatened to call for rolling strikes if it does not get certain guarantees on future terms and conditions.

The government is also planning to privatize some of the country's student loan portfolio and a stake in a government-owned uranium enrichment firm.

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