Royal Mail strike stymied by imminent valuation

The privatisation of the Royal Mail will add between £2.6bn and £3.3bn to Treasury coffers, with shares offered between 260p and 330p.

The estimations were announced earlier today, and the BBC's business editor Robert Peston added that the privatisation should be completed before Oct 15, long before a strike can take place.

The UK government plans to sell between 40.1 per cent and 52.2 per cent of Royal Mail’s share capital. The expectation is that 70 per cent will go to institutional investors and 10 per cent will be given to the company's staff. Book building will start today with the expectation it'll close on the 8 October and the Royal Mail making its market debut 11 October.

Following the offer, the government will retain between 37.8 per cent and 49.9 per cent in Royal Mail.

Joe Rundle of ETX Capital said, commenting on this morning's announcement:

Earlier this month, news of debt facilities lined up for RM soothed concerns that the privatisation will be difficult, particularly as industrial strikes in the lead up to this floatation unnerved some investors. The threat of industrial action remains but has receded somewhat as Royal Mail management and UK MP’s attempt to quell unions. Royal Mail may just be able to make its market debut before industrial action takes place.

ETX Capital's greymarket spread for the Royal Mail, priced in July between £2.710bn to £2.810bn, has experienced strong demand. Concerns about industrial action may, the firm says, have affected the initial public offering but increased information from the government during September saw rising interest. Their current spread for Royal Mail is priced between £2.950bn to £3.050bn.