Royal Mail sold today

[POSTMAN]

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Within a few hours, any of us will be able to apply for Royal Mail shares - either online, with a pack obtained at a post office or through a financial specialist.

And the process of offering shares to big investors will also begin.

So it is a historic moment, the first privatisation of an important public service since the 1990s.

Royal Mail's shares will be sold at a price of between 260 pence and 330 pence a share, valuing the widely revered service at between £2.6bn and £3.3bn.

Which means that despite employing almost 170,000 people, it will not be one of the 100 biggest listed companies in Britain by value.

That relatively low value reflects the perceived risks of investing in the company. Although it has returned to profit, its letters business is in what many would see as terminal decline, because of the unstoppable rise of assorted forms of electronic communications, and its healthier parcels operation is subject to serious competition.

Also, the kind of modernisation deemed necessary by the company's management cannot be taken for granted in a company where industrial relations remain fraught.

These risks are captured in the relatively high dividend yield or income to be paid by Royal Mail to its shareholders. At the proposed range in the sale price, Royal Mail shares would pay a dividend equivalent to between 6.1% and 7.7% of the offer price.

The timing of the sale is electric, coming as it does as the CWU union ballots its 100,000 members on a strike.

By starting the share sale today, the Department of Business has more or less guaranteed that Royal Mail will be in the private sector before any strike can actually happen. Royal Mail should be privatised by 15 October, eight days before the first possible day for a strike.


Not all grassroots Tories are overjoyed by the prospect of Royal Mail being in the private sector”

If demand for the shares is strong the government's stake could fall to just under 40% - and if in the few weeks after privatisation, demand continues to be strong, there is provision for further shares to be sold to investors, which would take the taxpayers' holding down to 30%.

The time of the sale is gripping for a second reason, that it comes just days before the Tories' annual conference - which raises the prospect of senior Conservative leaders citing it as another example of their pro-market credentials, in supposed contrast to the lurch to the left of Labour under Ed Miliband.

That said, not all grassroots Tories are overjoyed by the prospect of Royal Mail being in the private sector.

There is a perhaps a Thatcherite confrontational tint to the whole exercise, unusual for a government led by David Cameron, whose own ideological roots seem more Blairite than Iron Lady.

As I have already mentioned, for example, ministers are pressing ahead with a share sale on the very same day as the CWU trade union ballots its 100,000 Royal Mail workers on a strike.

And the cockles of those nostalgic for Thatcherism may be warmed by the fact that this is the first sale of a government asset where there is a large-scale initiative to sell shares to the general public since the heyday of privatisations in the late 1980s and early 1990s.

[SP115]

Not a sniff of a strike yet, CWU are taking the piss tbh.

[borders]

well they reckon the sale will be done and dusted by Oct 15th, which is a day or so before we know the result of the ballot !! it was never a ballot about Privatisation though, its a ballot to secure our terms and conditions going forward ....

[mickeymacca]

well they reckon the sale will be done and dusted by Oct 15th, which is a day or so before we know the result of the ballot !! it was never a ballot about Privatisation though, its a ballot to secure our terms and conditions going forward ....

I think you are being very generous there borders, surely the most important issue for the leadership of the CWU to contend with over the last 12 months is the issue of privatisation, and for them to be caught out as they appear to have been in terms of timing, I find disappointing. Could they not have taken a ballot 6 months ago so that if this situation occurred they would be better placed to respond more quickly( don't know if that is possible or not?). Agreed the T's and C's are the big issue going forward but the negotiating position (Industrial Action) would have been a lot stronger if they had began before a sale had gone through! I hate to sound like a pessimist but the appetite for IA will for some diminish after the sale goes through, because they will see it as the fight being lost. I WOULD NOT INCLUDE ANYONE WHO USES THIS FORUM TO BE OF THAT MINDSET AS WE ALL OBVIOUSLY TAKE AN ACTIVE INTEREST IN THE FUTURE OF THE ROYAL MAIL.

I don't know a lot about the leadership of the CWU but I would hardly think they would strike much fear into any potential corporate opponent. Dave Ward came across OK when I heard him interviewed, but the other bloke was quite frankly embarrassing.

Come on Borders tell me its all gonna be OK