Royal Mail staff may get shares in company

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ROYAL Mail is looking at offering staff a 10 per cent stake in the company as the UK government steps up plans for a flotation.

Ministers are understood to be in advanced talks about the move, which it is said would be achieved by offering attractive incentives to buy shares, or even offering some of them free.

It is believed that investment bank UBS tested the market appetite for a stock market listing before Christmas, and that recent gains on the FTSE 100 index – which has just enjoyed its best January for 24 years – is seen as a positive for a float.

However, the terms of the staff share deal must reportedly be put in place before a listing can go ahead. Royal Mail also needs to finalise a new pay deal with unions, as a two-year pay agreement is set to expire at the end of next month.

The privatisation will be the country’s biggest for more than 25 years, since the British Telecom and British Gas shares sales in 1984 and 1986 respectively.

A stock market flotation is only one option for Royal Mail’s privatisation, with the government also considering the potential for a sale to a rival mail group, or a private equity player. The project is being led by business minister Michael Fallon.

Royal Mail saw a leap in underlying earnings in the six months to the end of September, to £144 million from £12m a year earlier.