Bid favourites snub Royal Mail sell-off

[TrueBlueTerrier]

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Plans to part-privatise Royal Mail have hit an immediate setback, with the two most likely bidders showing a marked lack of enthusiasm.

Dutch postal giant TNT, which last year held talks to buy a 33 per cent share of Royal Mail, has no plans to take part in new discussions, according to senior industry sources.

And venture capital group CVC Capital Partners, which recently talked with the Labour Government about a £2billion stake, said it now had no immediate interest, though it would not rule out anything in the future.

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The previous Government's plans to sell a stake in Royal Mail were called off by former Business Secretary Lord Mandelson because of strong opposition from Labour MPs and postal unions, though he blamed the poor business climate.

Labour Ministers were alarmed at the low price that TNT was prepared to offer as well as the conditions that it wanted to attach to its investment.

It is understood that TNT wanted to take control of Royal Mail's lucrative GLS European parcel business based in Amsterdam. The Dutch also wanted to install their own executives in key areas.

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Business Secretary Vince Cable has asked the Postal Minister, fellow Liberal Democrat Edward Davey, to draw up a detailed plan to part-privatise Royal Mail.

The Lib Dems want to sell 49 per cent while the Conservatives favour selling the lot. It is likely that the final plan will involve selling 49 per cent with the remainder of shares being held by the Government and the employees.

Part of the problem facing Royal Mail is its huge pension deficit, which could soar to a record £11 billion.

Cable said the problems at Royal Mail, including the pension deficit, had to be addressed.

Royal Mail reported last week that operating profits for the past financial year increased by 26 per cent to £404million despite a series of strikes and falling mail volumes as the company cut costs and modernised its business.

The decision to sell off part of Royal Mail is likely to trigger a dispute with the Communication Workers Union.

'This is old politics wrapped in new language,' said CWU general secretary Billy Hayes. 'The public has consistently rejected the privatisation of Royal Mail. The move to regurgitate failed policies will be deeply unpopular.'

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[DirtyHarry]

If it's not nailed down, sell it. We own nearly nothing, why don't we go for the whole hog, and as a people and nation, own absolutely nothing.
Crikey, if we can flog off great British assets like Cadbury, we could flog our Grannies for a few quid.

[TrueBlueTerrier]

I honestly believe that at some point the UK will suffer because of all the strategic businesses that have been sold off, more so than now.

[kingtubby]

Bearing in mind the willingness of the ConDems to sell us off, maybe this 'lack of interest' from TNT/CVC is a ploy to buy in as low as possible. The current financial situation might encourage the govt to cash in at a relatively low price?

[andy2007]

It wouldn't surprise me. Although, at least that tactic will delay the sell off.