The UK's coalition government Oct. 13 said it will sell up to 90 percent of Royal Mail, the state-owned postal and parcel delivery company, either in an initial public offering or a private trade sale.
At least 10 percent of the company's shares will be reserved for employees, Business Secretary Vince Cable said as he published the government's controversial privatization bill.
Cable said he had no objections to a foreign takeover of the 360 year old company. "We are not nationalist in this. We don't object to companies just because they are owned by foreigners."
Royal Mail news from JOC:
UK to Offer Legislation to Privatize Royal Mail.
The government confirmed it will take over Royal Mail's $16.3 billion pension deficit to make the company attractive to potential bidders.
A government commissioned report in September recommended privatization, warning the company's current funding system is "unsustainable" and it needs private investment to finance modernization to boost productivity to the level of its foreign competitors.
Cable didn't give a timetable for the privatization but said it would not be before next summer. He also refused to put a valuation on the company.
The government hasn't decided on the sales mechanism, Cable said. "It could be an IPO or it could be a trade sale, it could be another financial structure."
The previous Labor administration halted a planned partial privatization of Royal Mail in 2009 amid a revolt by labor unions and a significant number of its own lawmakers.
CVC Capital Partners, a Luxembourg-based private equity group, reportedly offered around $3.5 billion for a 30 percent stake, well short of the then government's valuation.
TNT of the Netherlands, which entered the UK mail market in 2004, expressed an interest in Royal Mail which analysts saw as an attempt to take control of its profitable parcel delivery unit, General Logistics Services.
TNT eventually withdrew from negotiations and is now focused on splitting its mail and express divisions.
Cable said he didn't believe union opposition to privatization would be an obstacle to the sale of Royal Mail.
The government also said it plans to turn the separately operated Post Office into a mutual enterprise owned by its workers and sub-contractors who run its network of 11,500 branches.
-- Contact Bruce Barnard at email@example.com.