THE UK government yesterday began the formal process of floating the Royal Mail on the London Stock Exchange, confirming that an initial public offering (IPO) will take place “in the coming weeks”.
The news came as the Communication Workers Union, which is committed to disrupting the privatisation, confirmed that it had been forced to delay a planned strike ballot on the privatisation for legal and administrative reasons.
The union has concerns about the accuracy of its membership list and does not want any ballot result to be open to legal challenges from Royal Mail executives.
But business minister Michael Fallon said he was confident that postmen will disobey their union bosses and accept free shares in Royal Mail.
Fallon yesterday said that he doubted many of the postal service’s 150,000 UK workers will turn down the offer of free shares worth around £2,000 per person when the company joins the stock market in the coming weeks.
“The union has officially opposed the offer but we have seen in previous privatisations where unions opposed and the members have still subscribed,” he said. “And this time the shares are free.”
Stringent timetables covering industrial action mean the earliest possible date for strike action will now slip into mid-October – making it possible for the government to sell Royal Mail before the workers can officially go on strike.
Fallon insisted that there is no need for strike action given the pay offer that has been set out to members:
“There are negotiations continuing and there is a generous 8.6 per cent pay offer over three years – a lot better than a teacher or a nurse. There are also free shares for the employees and assurances on offer from the management that terms and conditions won’t change after privatisation.”
Spread betting firm IG has already launched a grey market on Royal Mail’s valuation, with early trades implying the firm will have a market cap of around £2.88bn when it floats, leaving it just outside the FTSE 100.
At least 41 per cent of Royal Mail’s shares will be floated on the London Stock Exchange, with a further 10 per cent distributed to postal workers.
The government could sell more shares if it receives sufficient of interest, with pricing yet to be decided.