The UK today confirmed it will sell a majority stake in Royal Mail, the state postal operator, in a flotation on the London Stock Exchange in the current financial year.
The initial public offering is expected to value the company, which dates back to 1516, at between £2.5 billion to £3 billion ($3.7 to $4.5 billion].
The company’s 150,000 workers will be given 10 percent of the shares for free on condition they are held for three years.
The government chose a stock market flotation over selling the company to a private buyer, including private equity groups and logistics companies such as DHL Express and TNT Express.
Royal Mail CEO Moya Greene, the former head of Canada Post, says privatization will enable the company to tap external capital, which is vital to finance its move from declining mail volumes into the faster-growing parcels business that is being driven by online shopping.
The Communication Workers Union, which represents about two-thirds of Royal Mail’s workforce, is opposed to privatization and has threatened protest strikes.
Royal Mail more than doubled operating profit to £403 million ($600 million) in the year to March 31, as surging parcel deliveries helped increase revenue by 5 percent to £9.5 billion ($14.2 billion).