Royal Mail privatisation: just 12 days to buy into float

[POSTMAN]

http://www.telegraph.co.uk/finance/pers ... float.html" onclick="window.open(this.href);return false;

The public will have just twelve days to apply for shares in the Royal Mail when it is privatised next month at a price between 260p and 330p each, valuing the company at up to £3.3bn.

The government intends to divest up to 70pc of Royal Mail - up to 52.2pc in the initial base offer plus a further 7.8pc if demand is high and it is giving 10pc of the shares to staff for free.

The Treasury said on Friday that Royal Mail would come to market in London in two weeks time.

The prospectus is expected later today and the share offer will open once the prospectus is published.

Richard Hunter, head of equities at Hargreaves Lansdown, said: “There has been significant interest from private investors registering for the Royal Mail share offer.

“Time will be short. We expect the share offer to open later today and close on Tuesday October 8 and therefore interested investors will need to act quickly.”

Postal workers will today begin voting on whether to take industrial action to oppose the privatisation plan, but the results will only be announced after the IPO has taken place. Voting by members of the Communication Workers Union will close on October 16 and the Royal Mail is expected to debut on the stock exchange around five days earlier.

[borders]

Reference: P/2013/326

Date: 27 September 2013



Royal Mail Share Offer

Expected Price Range and Offer Launch



Following the announcement by Her Majesty's Government ("HM Government") on 12 September 2013 of its intention to proceed with an initial public offering (the "IPO" or "Offer") of Royal Mail plc ("Royal Mail" or the "Group"), Business Secretary Vince Cable today announces the expected Offer price range and the commencement of the Offer for institutional and retail investors once an approved price range Prospectus is published today containing full details of the Offer.



Offer Highlights

· Expected Offer price range set at 260p to 330p per Share, implying a market capitalisation on Admission of between £2,600 million and £3,300 million.

· HM Government intends to dispose of a majority of the existing Shares, taking into account Shares sold in the Offer and the 10 per cent. of Royal Mail to be made available for free to around 150,000 eligible UK-based Royal Mail employees at or around the time of Admission under an employee free Shares offer (the "Employee Free Shares Offer"), which is separate and in addition to the Employee Priority Offer referred to below.

· The Offer consists solely of existing Shares being sold by HM Government.

· The Offer comprises between 401 million Shares and 522 million Shares, representing between 40.1 per cent. and 52.2 per cent. of Royal Mail's share capital on Admission, excluding Over-allotment Arrangements (the "Base Offer").

· Shares representing up to 15 per cent. of the Base Offer are also being made available pursuant to Over-allotment Arrangements.

· Following the Offer, HM Government's holding in Royal Mail is expected to be between approximately 37.8 per cent. and 49.9 per cent. assuming no exercise of the Over-allotment Option and between approximately 30.0 per cent. and 43.9 per cent. assuming exercise in full of the Over-allotment Option.

· Institutional Offer bookbuilding commences today, and is expected to close on 8 October 2013.

· The Retail Offer opens later today. Individuals can apply in the Retail Offer through participating Intermediaries, or direct to HM Government online (at http://www.gov.uk/royalmailshares" onclick="window.open(this.href);return false;) or by post. The last date for the receipt of applications by Intermediaries and by HM Government's receiving agent is 8 October 2013.

· Pricing and allocations are expected to be announced and conditional dealings in the Shares on the London Stock Exchange are expected to commence on 11 October 2013.



Institutional Offer

· The Offer includes an offer to institutional investors in certain jurisdictions (in the UK and elsewhere outside the United States under Regulation S and to QIBs in the United States in reliance on Rule 144A) (the "Institutional Offer").

· HM Government currently envisages that around 70 per cent. of the Base Offer will be allocated to institutional investors.



Retail Offer

· The Offer also includes an offer to members of the public located in the UK (the "Retail Offer"), which includes a priority offer to eligible Royal Mail employees located in the UK (the "Employee Priority Offer").

· Members of the public can apply through stockbrokers and share dealing providers who are participating as Intermediaries, who will apply for Royal Mail Shares on behalf of their clients. A list of the firms acting as Intermediaries for the Offer can be found at http://www.gov.uk/royalmailshares" onclick="window.open(this.href);return false;.

· Members of the public can also apply online in the Retail Offer from later today at http://www.gov.uk/royalmailshares" onclick="window.open(this.href);return false;, where they can find further information about the Offer, including the full Prospectus and Summary Prospectus. For those without internet access, application packs will be available in around 1,500 Post Office branches nationwide from Monday, 30 September 2013. Post Office branches stocking application packs can be found using the search tool at http://www.postoffice.co.uk/branch-finder" onclick="window.open(this.href);return false;, or by calling the Retail Offer helpline on 0330 123 0147.

· Minimum application size in the Retail Offer is £750 for members of the public and £500 for eligible Royal Mail employees in the Employee Priority Offer.



Further Information

· Royal Mail's implied dividend yield for the year ended 31 March 2014 would be between approximately 6.1 per cent. and 7.7 per cent. on the basis of the expected Offer price range per Share above and notional full-year dividend of £200 million intended to be proposed in respect of FYE 2014 (the amount Royal Mail believes it would have proposed if the Company had been listed throughout FYE 2014).

· The 10 per cent. stake in Royal Mail to be made available free to eligible employees is valued at between £260 million and £331 million based on the expected Offer price range per Share above.

· Each of Royal Mail (180 days), HM Government (180 days), and the Directors of Royal Mail (365 days) have committed to lock-up arrangements post Admission, which are subject to certain customary exemptions including a waiver by the Joint Global Co-ordinators.

· Pricing and allocations are expected to be announced and conditional dealings in the Shares on the London Stock Exchange are expected to commence on 11 October 2013.

· Admission to the premium segment of the Official List and unconditional dealings in the Shares on the London Stock Exchange are expected to occur on 15 October 2013.

· It is expected that following completion of the Offer, the Company will be eligible for inclusion in the FTSE UK Index Series at the quarterly review in December 2013.



Business Secretary Vince Cable said:

"Today is an important day in the life of Royal Mail: people can now apply to buy shares in this iconic British brand.

"This will give Royal Mail access to the private capital it needs to modernise, as envisaged under successive governments, and enshrined in law by Parliament two years ago.

"We have already committed to give eligible Royal Mail staff a real stake in the company by giving them 10 per cent of company shares for free.

"Now the sale of Government shares will give others a chance to have a real stake in this important company and we are encouraged by the interest shown by potential investors so far."



Moya Greene, Chief Executive Officer of Royal Mail, said:

"Royal Mail has a unique place in the UK and that will not change as we move into the private sector.

"We will now be better able to compete in what is a fast changing and intensely competitive market.

"I'm delighted our people will own a meaningful stake in the company and that the public now have the opportunity to own a share in our future as well."





Enquiries



Department for Business, Innovation & Skills / Shareholder Executive

Aileen Boughen

Phone: 020 7215 5972

Email: aileen.boughen@bis.gsi.gov.uk



Josh Coe

Phone: 020 7215 5943

Email: josh.coe@bis.gsi.gov.uk