Royal Mail to sell majority stake to fight competition

Royal Mail, the UK’s 360-year- old postal service, intends to hold an initial public offering of a majority stake “in the coming weeks” to help it gain a competitive edge against European rivals.

The government announced plans for the sale yesterday without offering an estimated value for the company. While the size of the stake will depend on market conditions, business minister Michael Fallon said the aim is to dispose of a majority.

The sale will be the largest privatisation since then prime minister John Major broke up British Rail in the 1990s.

The sell-off will be conducted with workers threatening to strike in protest.

“I don’t see that a strike is necessary,” Fallon told BBC Radio 4’s Today show. “There is a very generous payoff on the table. This is the right time to allow Royal Mail to access the capital markets, to invest in its future.”

With 159,000 workers, Royal Mail has sought to adapt its letter-focused network to more lucrative package shipping in the face of competition from TNT of the Netherlands and Deutsche Post’s DHL Express.

Landsdowne Partners and Standard Life Investments are among fund managers indicating interest in investing in the postal service, Sky reported on Sept 9.