Royal Mail will be valued at up to £3.3 billion when its controversial privatisation takes place next month, the Government said today.
Shares are expected to be priced at between 260p and 330p, giving a market valuation in the range of £2.6 billion and £3.3 billion.
Unconditional dealings in the stock will start on October 15, which is the day before voting closes in a ballot by the Communication Workers Union (CWU) over whether to back a campaign of industrial action on the sale. Any strike action would start a week later.
Around 150,000 eligible staff will be handed 10% of shares in the largest free stock offer of any privatisation in the UK over the past 30 years. This is equivalent to around £2,000 each at the mid-point of today’s offer price range.
A union communication being sent to CWU members today said: ‘’Those who want to sell off the Royal Mail Group are motivated purely by short-term gain and vested interests.
‘’We cannot give the company a free hand to determine your future and the future of UK postal services.’’
A vote at this week’s Labour Party conference opposed the sell-off and called on an incoming Labour government to renationalise a privatised Royal Mail.
In today’s offer launch document, it emerged that the Government is expected to retain a stake in Royal Mail of between 30% and 49.9%.
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.”
Individuals can apply for shares from later today, with the deadline for the receipt of applications being October 8. Further pricing details and share allocations will be confirmed when conditional dealings in Royal Mail start on Friday October 11.
Retail investors based in the UK can buy shares at a minimum of £750 and can also apply through intermediaries.
Hargreaves Lansdown stockbrokers has already reported significant interest from private investors registering for the share offer.
Richard Hunter, head of equities at Hargreaves Lansdown, said: “Once the prospectus is published and the share offer is open, we will see how much of this interest translates into people applying for shares.
“Time will be short. The share offer will close on October 8 and therefore interested investors will need to act quickly.”
Royal Mail handled more than 17 billion letters and more than 1.4 billion parcels during the 2012/13 financial year. Revenues were £9.1 billion, with profits after restructuring costs at £403 million.
Under a programme started in 2007/08, Royal Mail said it has invested £2.8 billion in operational improvements. The Post Office, which has been separate from Royal Mail since April 2012, is not for sale.
Business minister Michael Fallon told BBC Breakfast that postal services would not be adversely affected by today’s moves.
Reminded of Margaret Thatcher’s comment in the 1980s that she was not prepared to have the Queen’s head privatised, he said: “We are not selling the Queen’s head and we are not selling the post offices. We are selling Royal Mail.”
He added: “It’s fully protected, that’s quite separate, it’s protected by a new regulator, Ofcom.
“The six-days-a-week universal one-price-goes-anywhere service is absolutely separate and the ownership of Royal Mail can’t affect that.
“On the contrary, getting private investment into Royal Mail makes it better equipped to deliver that service to a better standard up and down the country.”
He said he expected the business to enter the stock market just outside the FTSE 100.