UK: Royal Mail worth up to £3.3bn for IPO

Britain's Royal Mail is expected to be valued at up to £3.3 billion when it launches on the stock market in October under the group's controversial part-privatisation, the government announced Friday. Royal Mail's initial public offering (IPO) is expected to be between 260 pence and 330 pence a share, giving the company a value of between £2.6 billion and £3.3 billion ($4.2 billion and $5.3 billion, 3.1 billion euros and 3.9 billion euros), the government said in a statement. The Conservative-Liberal Democrat government earlier this month launched plans to sell more than half the state-run postal service -- in what is set to be Britain's biggest privatisation in decades. The announcement is part of the government's strategy to slash the budget deficit, but has sparked anger from trade unions who argue that privatisation will provide a worse service for customers and are threatening to go on strike. "Following the announcement by Her Majesty's Government on 12 September 2013 of its intention to proceed with an initial public offering of Royal Mail plc, Business Secretary Vince Cable today announces the expected offer price range," Friday's statement said. It added that full trading of the shares on the London Stock Exchange is due to start on October 15. "Today is an important day in the life of Royal Mail: people can now apply to buy shares in this iconic British brand," Cable said in the statement. "This will give Royal Mail access to the private capital it needs to modernise, as envisaged under successive governments, and enshrined in law by parliament two years ago." He added: "The sale of government shares will give others a chance to have a real stake in this important company and we are encouraged by the interest shown by potential investors so far." The government's future holding in Royal Mail is expected to be between 37.8 percent and 49.9 percent, the statement added. Employees will receive 10 percent of the shares free of charge, Cable had already announced. Royal Mail has undergone major restructuring in recent years that was triggered by fierce competition from email. But the group recently enjoyed a surge in annual profits thanks to the increasing popularity of online shopping -- boosting its parcels business -- and owing to deep cost-cutting and big increases in stamp prices.