Royal Mail delivers IPO notice

The government says it will float the Royal Mail 'within weeks'. The same timescale given by the CWU for a Royal Mail strike.

by Emma Haslett
Last Updated: 27 Sep 2013
Rule number one in the 'how to do a good IPO' handbook surely has to be not to float your business on the same day - or indeed, in the same month - as your employees decide to stage a full-blown strike.

Alas, under a bizarre set of circumstances, that could be exactly what happens to Royal Mail when it floats 'in the coming weeks'.

This morning Vince Cable's Department for Business and Innovation gave notice to the stock exchange that it is planning an IPO over the next few weeks - which is exactly the timescale given by the Communication Workers' Union for a strike over pay and conditions.

The CWU is expected to serve notice to Royal Mail's management today, which could mean they're striking by mid-October. The stock exchange notice didn't set a date - but it did imply that the listing would be sooner, rather than later, which means its prospectus will have to set out in detail its dispute with workers. Not exactly great for share prices.

The announcement also avoided giving much detail about how much of Royal Mail Cable plans to list, saying merely that he 'will retain flexibility around the size of the stake to be sold, as this will be influenced by market conditions at the time of the transaction, investor demand and the objective to ensure that value for money for the taxpayer is achieved'.

What it did say, though, was that it intends the stake it floats to be a 'majority' (taking into account the 10% that will go to Royal Mail workers). When it floats, the £600m of loans it received from the government will be transferred to its banking syndicate, led by Bank of America Merrill Lynch, Barclays, Goldman Sachs and UBS, and it will have the option to take out another £800m of loans if it needs them.

Although 150,000 Royal Mail workers will be given free shares, after which they will be able to apply for shares worth £500 or more, the minimum stake members of the public will be able to apply for is £750.

So Vince Cable and the CWU are now involved in a game of chicken to determine when their respective events will take place. If the business minister cracks first, the CWU could take great delight in wrecking his big chance to divest himself of Royal Mail. If the CWU gives notice today, Cable will avoid floating on that date at all costs.

What's certain is that the wheels have been set in motion. The organisation which even Margaret Thatcher called 'a [privatisation] too far' will be in the public's hands 'within weeks'. Complaints should be addressed to the government's (I)PO Box...

- Read this month's MT Interview with ex-Royal Mail boss Adam Crozier.

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