The sale has raised £750 million.
Following independent financial advice, the government decided that yesterday (10 June 2015) was a good opportunity to realise value for money from a sale of part of its remaining shareholding in Royal Mail. The shares were sold through an accelerated bookbuild which enabled government to take advantage of the current favourable market conditions.
The Business Secretary, Sajid Javid said:
This sale has raised £750 million and represents good value for taxpayers. That money can be used to reduce public debt, which is how we will deliver lasting economic security for working people.
Royal Mail has demonstrated that it can thrive in the private sector. It now has the ability to access the funds it needs to ensure that it has a sustainable future and can adapt to the changes in the postal market.
The universal postal service remains well protected by law and by Ofcom.
Speaking last night, the Chancellor, George Osborne, said:
We want to help the Royal Mail attract more investment and serve its customers, and use the money we raise in return to pay down the national debt.
And we’re also going to make sure that there is a special bonus for the workforce who have done such a great job turning Royal Mail around.
Thanks to them, Royal Mail’s share price has risen; so we’re going to give more of the shares to the staff.
Building on the success of the initial scheme, and in recognition of their work in turning around the Royal Mail, the Chancellor announced last night that government intends to gift up to 1% of the shares of the company to Royal Mail’s UK employees. These shares will come from government’s remaining holding and they will be subject to sales restrictions.
This builds on the 10% of the total shares in the company that were awarded to Royal Mail employees as part of the 2013 flotation.
The government sees no policy reason to keep its remaining stake in Royal Mail.
Post Office Ltd, which operates the network of branches throughout the UK, remains wholly-owned by government and was separated from Royal Mail in April 2012. The relationship between the Post Office and Royal Mail is a commercial one and a 10 year contract for the delivery of Royal Mail services through post offices was put in place in 2012.
Notes to editors
- On 4 June the Chancellor announced that the government will sell its remaining shares in the Royal Mail.
- In 8 June the government published a report explaining the sale of the government’s remaining stake in Royal Mail.