Britain is seeking to privatize its Royal Mail postal system, as the Conservative coalition government told parliament on Wednesday that it will sell a majority government stake in the postal operator.
Secretary of State for Business Vince Cable told lawmakers that they’d schedule an initial public offering for Royal Mail on the London Stock Exchange within the financial year, before March 2014.
The IPO is expected to value the Royal Mail Holdings PLC at 3 billion pounds (US $4.47 billion), Reuters reports, making it Britain’s largest privatization in decades.
The government will offer 10 percent of the shares floated for free to certain postal workers, on the condition that the shares be held for at least three years.
Cable said the sale rounds off the final stage of postal reform and would help secure six days a week universal and affordable postal services. He called the decision practical, logical and commercial.
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The government will “retain flexibility” around the exact number of shares to be sold, Cable said, but he added that they’d nonetheless sell a majority stake.
The Communication Workers Union (CWU), which represents postal workers, is opposed to the privatization and has threatened a strike if it isn’t called off.
“Nobody outside government and their potential investors wants their postal service sold,” said CWU General Secretary Bill Hayes, in a statement on Tuesday. “The public consistently oppose the sale and recently 96% of workers voted against.”
Opposition Labor Party politician Chuka Ummuna fired back quickly after Cable’s statement, saying that the ruling coalition hadn’t adequately justified the sale and simply sought quick income for ailing state coffers.
He said the government sought to privatize the profits of the postal service even though it nationalized its debt, referring to efforts to tackle the Royal Mail’s pension burden.
Royal Mail, however, welcomed the government’s plans, and said it’d make their business more competitive.
“The government has made it clear that it doesn’t have the money to allocate to Royal Mail ahead of schools and hospitals,” said the firm in a statement. “Access to capital markets will allow us to be more nimble to seize the opportunities ahead of us.”
Royal Mail said contract and employment terms for its workforce won’t be affected, and that it’d sign a fresh contract with the union. Backers of privatization, like Royal Mail, have pointed to private postal operators in Austria, Germany and Belgium, as far more profitable and still delivering quality service.
The company reported revenues of 9.2 billion pounds in 2012-2013, up 5 percent from the year before, with profits of 403 million pounds.