12th Oct 2015 16:01
LONDON (Alliance News) - The UK Secretary of State for Business, Innovation and Skills Sajid Javid late Monday said the government will sell its remaining 14% stake in Royal Mail PLC, by way of an accelerated bookbuilding process which has opened with immediate effect.
"The business secretary has today authorised a sale process to begin. Current market conditions should allow a successful sale and the realisation of value for the taxpayer," said a spokesman from the department.
The 14% stake in Royal Mail is held by Postal Services Holding Co Ltd, and will be sold on behalf of the government by way of a placing to institutional investors.
The announcement follows on from the government raising GBP750.0 million in June by selling a 15% stake in Royal Mail at 550.0 pence per share, significantly more than it got per share when it first floated the mail operator in a criticized initial public offering nearly two years ago. Shares in the company were floated at 330 pence per share.
Royal Mail shares closed up 0.6% to 472.20 pence per share on Monday afternoon.
The price at which the shares will be sold will be determined by way of an accelerated bookbuilding process. The book will open with immediate effect. Bank of America Merrill Lynch, Goldman Sachs International and JP Morgan Securities PLC have been appointed to act as joint bookrunners.
That 14% stake is made up of around 140.0 million Royal Mail shares and following the sale, the UK government will no longer hold a stake in the postal service. Details of the placing price and the number of shares will be announced in due course, the government said.
The legacy postal operator still has an obligation to deliver post to every address in the country and has been going through a transformation and efficiency drive as it positions itself to cope with the burgeoning parcels market and the gradual decline in the letters market.
The Post Office, which operates the network of branches throughout the UK, remains wholly-owned by the 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.
By Joshua Warner; [email protected]; @JoshAlliance
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