Selling the Royal Mail

Abstract

In October 2013, the Royal Mail (RM) was sold by the UK government through a public share offering. This was the largest privatization by value since the 1990s. The RM is facing competition in its core letters and parcels businesses and the coalition government concluded that its future best lay in the private sector with access to the private capital market. This study contrasts this privatization with large privatizations in the 1980s and 1990s. Significant differences are identified in terms of post-privatization gains to investors, the attitude towards marketing of the shares to the public, the preferential share scheme for employees and the treatment of pension liabilities. This privatization is shown to be particularly poor value for money for British taxpayers.