LONDON â€" The British government said on Wednesday that it planned to sell a majority stake in Royal Mail, the country's postal service, and would give some shares free to workers.
The government said an initial public offering, which would be the biggest privatization in the country since the railroads 20 years ago, would proceed in London before the end of March 2014. As part of the sale, which has been considered for years, the government plans to give 10 percent of the shares to Royal Mail employees in Britain free on the condition that they hold them for three years.
Both institutional and private investors would be able to buy shares in the initial offering. Some analysts have said previously that the planned offering could value Royal Mail at about £3 billion ($4.5 billion). The government has yet to decide how much of the company it would sell.
“We will retain flexibility around the size of the stake to be sold,†Vince Cable, the business secretary, said in a statement in Parliament. “This will be influenced by market conditions, investor demand and our objective to ensure overall value for money for the taxpayer.â€
Plans to privatize Royal Mail have become more concrete recently when the service's finances improved and pressure to reduce the budget deficit increased. Royal Mail had struggled to compete with other postal services in an increasingly competitive market where many people prefer e-mail to handwritten letters. But a growing online retail market has helped Royal Mail, which delivered more online purchases by post.
Royal Mail said it welcomed the plan and that “private ownership will enable Royal Mail to become more flexible and fleet of foot in the fiercely competitive markets in which we operate.â€
Moya Greene, chief executive of the Royal Mail Group, said in a statement that “employees will have a meaningful stake in the company and its future success†and that “the public will have the opportunity to invest in a great British institution.â€
Royal Mail's origins date to 1516, when post was carried for Henry VIII and the Tudor court. The service was opened to the public by Charles I in 1635. Royal Mail is now one of the largest employers in Britain, where it has 150,000 staff members.
But there was criticism from the Communications Workers Union, the trade union representing postal workers, which threatened a strike. The union “will continue to fight the sale and without worthwhile and legally binding assurances on terms and conditions, strike action is inevitable,†Dave Ward, the union's deputy general secretary, said on the organization's Web site.
Goldman Sachs and UBS were hired as the lead banks to manage the share sale on the London Stock Exchange. Barclays and Bank of America Merrill Lynch will also work on the sale.
Royal Mail had revenue of £9.3 billion in the fiscal year that ended March 31. Operating profit was £403 million.
