Government To Complete Royal Mail Sell-Off

The Government will unveil the privatisation of its final stake in Royal Mail (LSE: RMG.L - news) on Thursday, bringing the curtain down on five centuries of state ownership.

Sky News has learnt that a written ministerial statement will be laid in Parliament later to confirm the gifting of the remaining 1% of Royal Mail in public ownership to the company's 140,000 employees.

The controversial move - which will contradict official advice given by the top civil servant at the Department for Business, Innovation and Skills (BIS) - will see a stake worth £45m at the company's current share price distributed to staff.

Employees are expected to be prevented from selling the shares - worth £321-per-employee - for three years, in line with two previous tranches of shares given to them.

The privatisation of Royal Mail was among the most contentious events of the last Parliament, with Sir Vince Cable, the then Business Secretary, presiding over the sale of 60% of the company in the autumn of 2013.

The shares were priced at 330p but immediately soared, provoking claims that the Government had mispriced them at the expense of UK taxpayers.

A 10% stake was handed to staff at the same time, which employees will be free to sell from October this year.

Following last year's General Election, Sir Vince's successor, Sajid Javid, said he would sell the remainder of the company as quickly as possible, with a further 1% handed to staff.

Last June, the Government sold half of its residual stake at 500p-a-share, raising £750m, followed in October by the disposal of a further 13% stake for 445p-a-share, generating proceeds of just over £590m.

In total, the revenue raised from sales of all the Government’s shares was £3.3bn, with Royal Mail employees now holding 12% of the company.

Speaking last autumn, Mr Javid said:

"This is a truly historic day for Royal Mail with the workers gaining a share of this history.

"We have delivered on our promise to sell the government’s entire remaining stake which means that for the very first time the company is now wholly owned by its employees and private investors.

"This is the right step for the Royal Mail, its customers and the taxpayer."

Since the last sale to City investors, the company's performance has been better than expected, with robust Christmas trading leading several analysts to upgrade their profit forecasts for 2016