11th Jun 2015 06:31
LONDON (Alliance News) - The UK government Thursday said it had raised GBP750 million by selling a further 15% stake in Royal Mail PLC for 550 pence a 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.
The Department for Business, Innovation & Skills had announced Wednesday that it would be selling half its remaining 30% stake in Royal Mail in an accelerated bookbuild.
The sale means the UK government is left with 149.9 million Royal Mail shares, a 15% stake. Chancellor of the Exchequer George Osborne later said a 1% stake of the remaining 15% would be gifted to the company's staff. Staff took a 10% stake in the initial IPO.
"This sale has raised GBP750 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," Business Secretary Sajid Javid said in a statement.
"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," he added.
Shares in Royal Mail surged higher following its initial flotation in October 2013, prompting a long-running row between the previous coalition government and critics over whether the shares had been priced too cheaply and resulted in taxpayers missing out on an extra windfall. Shares in the company were floated at 330 pence and closed at 516.5 pence on Wednesday.
Royal Mail last month posted higher profit for the financial year to March 29 as cost-cutting measures in the UK offset lower-than-expected revenue in its parcels business. It reported a pretax profit of GBP569 million for the year ended March 29, up from GBP421 million a year earlier, even though revenue declined to GBP9.42 billion from GBP9.46 billion.
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 universal postal service remains well protected by law and by Ofcom," Javid said.
BofA Merrill Lynch, Goldman Sachs International and JP Morgan Securities acted as Joint bookrunners for the placing. Rothschild acted as capital markets adviser and Freshfields Bruckhaus Deringer LLP acted as legal counsel.
The government has pledged not to sell any more shares for 90 calendar days without agreement from the majority of the bookrunners.
By Steve McGrath; [email protected]; @stevemcgrath1
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