iNVEZZ.com, Thursday, October 24th: The National Audit Office (NAO) will look into the government’s controversial privatisation of Royal Mail (LOM:RMG) amid claims the 497-old postal services firm was sold off too cheaply to attract City investors who made millions out of a surge in the price of the shares well above the price in the initial public offering.
The sale of Royal Mail is coming under scrutiny after allegations that the IPO price was too low. Royal Mail shares jumped as high as 490p in morning deals on the first day of trading (Royal Mail’s share price surges 38% on market debut). The surge marked a vast gain of almost 40 percent above the float price of 330p set by the government that valued Royal Mail at £3.3 billion.
The NAO yesterday said it would look at how the price range for the share offer was set and the discussion of possible revisions to the range. “Given the scale and significance of what has been the first public offering for many years of shares in a publicly owned company, the National Audit Office will be conducting a value for money examination of the privatisation of the Royal Mail,” the spending watchdog said in a statement, as quoted by The Financial Times.
The outcome of the investigation is expected to be published in the first half of next year.
Post Office managers set for industrial action over pay
The news of the NAO probe adds to woes at Royal Mail, whose staff recently voted for a nationwide strike next month (Royal Mail share price: Staff vote to go on strike on November 4). The 24-hour stoppage is being planned by the Communication Workers Union (CWU) amid a bitter row over pay and pensions which threatens to disrupt the busy Christmas delivery season if left unresolved.
Adding to these fears, a new dispute has emerged in the UK postal services sector, with Post Office managers announcing that they will also take industrial action over pay. Unite, which represents 900 managers, said its members would refuse to work overtime and “work to rule” for 24 hours tomorrow in their first industrial action in 34 years. The union accused the Post Office, which was split from the Royal Mail last year, of “dragging its feet” for the last 16 months over reaching a new pay settlement. According to Brian Scott, national officer for Unite, Post Office managers had been waiting since June 2012 for pay review. He was quoted by The Times as saying: "No-one wants to take this action, but the intransigence of the employer makes this necessary."
As of Wednesday, 23.10, buy Royal Mail shares at 550.00p.
As of Wednesday, 23.10, sell Royal Mail shares at 511.00p.