Royal Mail sold today

Royal Mail

Within a few hours, any of us will be able to apply for Royal Mail shares - either online, with a pack obtained at a post office or through a financial specialist.

And the process of offering shares to big investors will also begin.

So it is a historic moment, the first privatisation of an important public service since the 1990s.

Royal Mail's shares will be sold at a price of between 260 pence and 330 pence a share, valuing the widely revered service at between £2.6bn and £3.3bn.

Which means that despite employing almost 170,000 people, it will not be one of the 100 biggest listed companies in Britain by value.

That relatively low value reflects the perceived risks of investing in the company. Although it has returned to profit, its letters business is in what many would see as terminal decline, because of the unstoppable rise of assorted forms of electronic communications, and its healthier parcels operation is subject to serious competition.

Also, the kind of modernisation deemed necessary by the company's management cannot be taken for granted in a company where industrial relations remain fraught.

These risks are captured in the relatively high dividend yield or income to be paid by Royal Mail to its shareholders. At the proposed range in the sale price, Royal Mail shares would pay a dividend equivalent to between 6.1% and 7.7% of the offer price.

The timing of the sale is electric, coming as it does as the CWU union ballots its 100,000 members on a strike.

By starting the share sale today, the Department of Business has more or less guaranteed that Royal Mail will be in the private sector before any strike can actually happen. Royal Mail should be privatised by 15 October, eight days before the first possible day for a strike.

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Not all grassroots Tories are overjoyed by the prospect of Royal Mail being in the private sector”

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If demand for the shares is strong the government's stake could fall to just under 40% - and if in the few weeks after privatisation, demand continues to be strong, there is provision for further shares to be sold to investors, which would take the taxpayers' holding down to 30%.

The time of the sale is gripping for a second reason, that it comes just days before the Tories' annual conference - which raises the prospect of senior Conservative leaders citing it as another example of their pro-market credentials, in supposed contrast to the lurch to the left of Labour under Ed Miliband.

That said, not all grassroots Tories are overjoyed by the prospect of Royal Mail being in the private sector.

There is a perhaps a Thatcherite confrontational tint to the whole exercise, unusual for a government led by David Cameron, whose own ideological roots seem more Blairite than Iron Lady.

As I have already mentioned, for example, ministers are pressing ahead with a share sale on the very same day as the CWU trade union ballots its 100,000 Royal Mail workers on a strike.

And the cockles of those nostalgic for Thatcherism may be warmed by the fact that this is the first sale of a government asset where there is a large-scale initiative to sell shares to the general public since the heyday of privatisations in the late 1980s and early 1990s.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 367.

    alan @364

    And you tell us why. Thank you.

    And you tell us why. Thank you.

    No word of better ways
    You could be, are you, one of them?
    That knows nothing of time and weariness, of age and pain
    Comfortable, no doubt

    May your God forgive you, knowing not

  • rate this

    Comment number 366.

    The most catastrophic thing to be announced today is the accelerating of the state subsidy for house purchase plan from January 2014 to NOW - this will create a diabolical housing bubble which will do immense damage to the economy.

    The BoE is prevented from commenting on this inanity till NEXT SEPTEMBER!

    The Royal Mail thing is a pin-prick in comparison.


  • rate this

    Comment number 365.

    It will be interesting to see if privatisation of Royal Mail has an affect on the £1 million bonuses that the directors award themselves for a job well done!
    The Tories are really desperate for headlines for their party conference.
    It shows me once again how out of touch Mr Cameron really is and I'm sad to see that Labour will have to try really hard to lose the next election!!

  • rate this

    Comment number 364.

    Michael Hesiltine should have done it years ago.
    Next one to sell-off is the fire service which is under-worked, over-paid, over-pensioned and much to keen on striking.
    Then if teachers don't stop threatening to go on strike they can be next.

  • rate this

    Comment number 363.

    VERY nice to see Robert Peston reporting on this matter rather than the awful Ms Yueh.
    He has written a fair article . Personally I think it's worth privatising if only to bring it into line with all the others in the 1990s----remember? In those days when we never had it so good, we all erned enough, we didn't pay Bedroom Tax, we didn't have millions of immigrants, we stood tall in the world !!!

  • rate this

    Comment number 362.

    About time this remaining nationalised dinosaur was privatised.The Unions bleat yet again, but ALL Unions believe they're still in the 19 century--can't stand em !
    Privatisation will probably be supported by Union members who realise that the share offer and wage deal are both good for them-and they probably can't stand unions either! A long overdue and welcome end to an outdated Mail Service.

  • rate this

    Comment number 361.

    What annoys me is that the privatisation is being rushed through and is undervalued for obviously political reasons as most public and many government backbenchers are against it, and government has not retained a majority stakehold.

    What bothers me also is what is the money to be used for and I suspect it will be pre-election bribes and spin about having to borrow less on the back of the sale.

  • rate this

    Comment number 360.

    Privatisation is sign of STATE INCOMPETENCE.

    It is evidence of the throwing in of the towel and an absolute acknowledgement that they and their civil servants are unfit to run anything, including the government.

    Why do the people not see it this way?

    Could it be that it is because thieves, robbers, rogues and associated ne'er-do-wells run the media (incl BBC) and tell lies to the people?

  • rate this

    Comment number 359.

    354. Bruxical

    The closer analogy is:

    Imagine somebody coming to your door and telling you that the water board that your council used to own, built with your money over the years, was sold to a mainly foreign owned company and in future you would be paying for them to make profits. And that your neighbours had made a profit by selling it off. Including your share.

    Same as it ever was.


  • rate this

    Comment number 358.

    One problem of privatisation and so of re-nationalisation, is that 'the money has been spent'

    Even real or imagined 'national gains' from upheaval & crisis (care of 'free market' rule), are largely private gains: and they - like the original windfall profits - will be substantially 'tucked-away' overseas

    Reclamation will require united initiative, some inflation & bilateral international deals

  • rate this

    Comment number 357.

    Nationalisation in the sense of reclaimed use of national assets, natural & created, is first of all a question of democracy, then of best means to achieve

    We know the folly of 'public ownership' without real democracy, whether in the Soviet Union or post-war Britain, goodwill wasted, management entrapped, unions tail-chasing, politics a race to the bottom

    In equal partnership, a will and a way

  • rate this

    Comment number 356.

    IF 'a give-away' with £750 for stock market risk, then 'a steal-away' for the rich, alongside the institutional

    Unless 'a give away' it would not be IFA-unethical to encourage small savers even to think of owning shares, let alone single-company

    So, they 'just have to' give away the nation's silver, including to those who will cash-in and re-invest in cheap labour overseas

    I'm alright Jack!

  • rate this

    Comment number 355.

    Royal Mail is now a private sector industry and is going to be listed on the stock exchange. All the employees are given a 'free' issue of shares that we the public have paid for; does this count as a bonus? will HMRC tax each worker for this unearned income?

  • rate this

    Comment number 354.

    Imagine somebody knocking on your door and trying to sell you a car you already own and is sitting in your driveway. That's what these Conmen are trying to do, sell us something we already own.

  • rate this

    Comment number 353.

    The BBC are like the Tories own U tube channel

    I am sure the news about tax break for partners and the £400 million of drug spending with ordinary Dave’s best friend was


    By the con’s for the con’s

  • rate this

    Comment number 352.

    This is NOTHING to do with the EU. Possible bidders include the state owned and run postal services of several EU countries. The worst scenario would be foreign owned with the current PO management. In this area IF we have the regular posties it is a good service but with the obsession with flexibility we get staff who just do not know the area. The unions suggest cost cut ideas but ignored.

  • rate this

    Comment number 351.

    I am disgusted with this. I don't want a big state but I do want us to retain the maximum possible number of symbols of nationhood: shared things or shared ways of doing things if you like.
    If allowed the Tories would monetarism everything: air, time, light. They know the cost of everything but the value of nothing. They love money and have no understanding that that is the root of all evil.

  • rate this

    Comment number 350.

    [ Dave was]-
    "elected by the most of those whose boast
    it was to represent the most of most
    of most of most of the entire state-
    or most of it at any rate"...
    "And all the people everywhere they went
    knew to their cost exactly what it meant
    to be dictated to by the majority.
    But that meant nothing, - they were the minority"
    From Piet Hein's grook - Majority Rule

  • rate this

    Comment number 349.

    Excellent news. We might get a decent service at last. Now we need to get all the other sleepy hollows privatised.

  • rate this

    Comment number 348.

    There is a limit to how much effort I'll expend to make £50.

    I've been to three Post Offices this morning, none of them has a single copy of the 447 page prospectus.

    At best they might arrive on Monday.

    Or I might not bother.


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