London:
Britain's government officially launched plans to privatise more than half of Royal Mail, saying an initial sale of shares in the state-run postal service would occur within weeks.
Royal Mail and the government acknowledged in a joint statement that strike action by postal workers unhappy at the part-privatisation of the centuries-old service could not be ruled out despite ongoing talks.
The government had in July announced plans to privatise more than 50 percent of Royal Mail following a major restructuring of the organisation in recent years, triggered by fierce competition from email.
The privatisation was expected to be the biggest by a British government since former prime minister Margaret Thatcher - who died this year - sold off former state-owned companies British Gas and British Telecom to the public in the 1980s.
Media reports say the part-sale of Royal Mail could be worth up to £3.0 billion ($4.74 billion). An initial offer price per share was expected shortly, traders said.
The government has agreed to take on Royal Mail's historic pension deficit.
Royal Mail today said that it was entering into new debt facility agreements which would "lead to a significant reduction" in the group's borrowing costs.
"Her Majesty's Government today announces its intention to proceed with an initial public offering of Royal Mail," said a joint statement, which added that the IPO was "expected to take place in the coming weeks".
Royal Mail is to list on the London Stock Exchange, while the coalition government said it would "retain flexibility around the size of the stake to be sold".
Business Secretary Vince Cable said it was "an important day for the Royal Mail, its employees and its customers".
He added: "HM Government is taking action to secure a healthy future for the company. These measures will help ensure the long term sustainability of the six days a week, one-price-goes-anywhere universal postal service.
Cable, a member of the Liberal Democrats which share power with Prime Minister David Cameron's Conservatives, meanwhile confirmed that 10 percent of Royal Mail shares would be handed out to its employees free of charge.
Around 150,000 staff will be eligible to get a free stake in the business under Britain's largest employee share scheme of any major British privatisation for almost 30 years.
Royal Mail staff will be allowed to buy additional shares, while members of the public can purchase a minimum amount of stock totalling £750. The biggest buyers of shares are set to be large institutions.
"We are now looking out for more details on the indicative price which are due in the coming days," said Joe Rundle, head of trading at ETX Capital.
"We expect it to be priced very attractively by the government in order to garner the demand to deem this IPO as a success given the importance surrounding it."
Unions to meet Royal Mail chief
The government has argued that partial privatisation will allow Royal Mail the freedom to raise capital, continue modernising and meet booming demand for online shopping delivery.
But that has caused anger among unions who fear the sell-off will lead to job cuts and a poorer service for customers.
The Communication Workers Union, which is planning to ballot its members for possible strike action over jobs, pay and other issues linked to privatisation, was meeting with Royal Mail chief executive Moya Greene today.
"Negotiations between Royal Mail and the CWU are continuing and Royal Mail remains committed to reaching an agreement with the CWU and averting industrial action," the government said today.
"However, there can be no guarantee that negotiations will lead to a successful outcome or the aversion of industrial action."
Royal Mail recently enjoyed a surge in annual profits thanks to the increasing popularity of online shopping which generates parcel traffic, and owing also to deep cost-cutting and big increases in stamp prices.
"Our strategy is delivering a revitalised company, with a unique UK, multi-use network through which we are proud to deliver the universal postal service for all UK citizens," Greene said today.
The coalition government relaunched plans to part-privatise Royal Mail three years ago and after the proposal was ditched by the former Labour administration amid the global financial crisis.
Royal Mail continues to operate most British postal services even though its more than 350-year-long monopoly of the letter-delivery business ended in 2006 as new rules kicked in to allow rival operators.
Royal Mail and the government acknowledged in a joint statement that strike action by postal workers unhappy at the part-privatisation of the centuries-old service could not be ruled out despite ongoing talks.
The government had in July announced plans to privatise more than 50 percent of Royal Mail following a major restructuring of the organisation in recent years, triggered by fierce competition from email.
The privatisation was expected to be the biggest by a British government since former prime minister Margaret Thatcher - who died this year - sold off former state-owned companies British Gas and British Telecom to the public in the 1980s.
Media reports say the part-sale of Royal Mail could be worth up to £3.0 billion ($4.74 billion). An initial offer price per share was expected shortly, traders said.
The government has agreed to take on Royal Mail's historic pension deficit.
Royal Mail today said that it was entering into new debt facility agreements which would "lead to a significant reduction" in the group's borrowing costs.
"Her Majesty's Government today announces its intention to proceed with an initial public offering of Royal Mail," said a joint statement, which added that the IPO was "expected to take place in the coming weeks".
Royal Mail is to list on the London Stock Exchange, while the coalition government said it would "retain flexibility around the size of the stake to be sold".
Business Secretary Vince Cable said it was "an important day for the Royal Mail, its employees and its customers".
He added: "HM Government is taking action to secure a healthy future for the company. These measures will help ensure the long term sustainability of the six days a week, one-price-goes-anywhere universal postal service.
Cable, a member of the Liberal Democrats which share power with Prime Minister David Cameron's Conservatives, meanwhile confirmed that 10 percent of Royal Mail shares would be handed out to its employees free of charge.
Around 150,000 staff will be eligible to get a free stake in the business under Britain's largest employee share scheme of any major British privatisation for almost 30 years.
Royal Mail staff will be allowed to buy additional shares, while members of the public can purchase a minimum amount of stock totalling £750. The biggest buyers of shares are set to be large institutions.
"We are now looking out for more details on the indicative price which are due in the coming days," said Joe Rundle, head of trading at ETX Capital.
"We expect it to be priced very attractively by the government in order to garner the demand to deem this IPO as a success given the importance surrounding it."
Unions to meet Royal Mail chief
The government has argued that partial privatisation will allow Royal Mail the freedom to raise capital, continue modernising and meet booming demand for online shopping delivery.
But that has caused anger among unions who fear the sell-off will lead to job cuts and a poorer service for customers.
The Communication Workers Union, which is planning to ballot its members for possible strike action over jobs, pay and other issues linked to privatisation, was meeting with Royal Mail chief executive Moya Greene today.
"Negotiations between Royal Mail and the CWU are continuing and Royal Mail remains committed to reaching an agreement with the CWU and averting industrial action," the government said today.
"However, there can be no guarantee that negotiations will lead to a successful outcome or the aversion of industrial action."
Royal Mail recently enjoyed a surge in annual profits thanks to the increasing popularity of online shopping which generates parcel traffic, and owing also to deep cost-cutting and big increases in stamp prices.
"Our strategy is delivering a revitalised company, with a unique UK, multi-use network through which we are proud to deliver the universal postal service for all UK citizens," Greene said today.
The coalition government relaunched plans to part-privatise Royal Mail three years ago and after the proposal was ditched by the former Labour administration amid the global financial crisis.
Royal Mail continues to operate most British postal services even though its more than 350-year-long monopoly of the letter-delivery business ended in 2006 as new rules kicked in to allow rival operators.
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