Royal Mail sale to Czech billionaire - why not blocked?

[skwdenyer]

I may be daft, but why on Earth isn’t the Govt blocking the sale of Royal Mail?

I realise it is now (insanely) a private company, but it is surely a core British asset. Can you imagine the USA privatising the USPS and then allowing a foreign billionaire to buy it?

So far the buyer has made *time limited* assurances to keep the headquarters and tax base in the UK; the Government appears to have applied no binding conditions.

If you believe in Brexit and “taking back control” - or even if you don’t - it is hard to imagine a more blatant example of so much that is wrong with the UK right now.

Or am I just out of step? I can see the merits in some private ownership to secure capital. DHL is a good example of that (being the privatised German postal service). But the German government retained a quarter share, and there’s no chance whatsoever it’s HQ or tax base are at risk of being offshored.

[Yabu]

skwdenyer said:

I may be daft, but why on Earth isn’t the Govt blocking the sale of Royal Mail?

I realise it is now (insanely) a private company, but it is surely a core British asset. Can you imagine the USA privatising the USPS and then allowing a foreign billionaire to buy it?

Government may be dropping the ball, whilst I assume incompetence in most cases with them I do wonder if they would be happy in this case to be rid of the future liabilities of Royal Mail- I’m not sure what financial position it’s in currently, seem to remember it being in news years ago with poor finances years ago, has that all been resolved?
What’s the actual financial state of Royal Mail is looking into the future?

What assets has Royal Mail got? What liabilities does it have? Pension liabilities? What’s the work place/corporate culture like there now? Financial outlook? What’s the financial situation been there the last few years? If you looked into those you could probably come to a few conclusions about the viability of Royal Mail going forward.

Royal Mail made sense to me years ago, post office, letter delivery and parcel force but now the post office is its own thing and neither it or letters are used in the volume they once were and parcel delivery is competitive for custom.

Phone bill, utilities, car insurance, etc , etc are all email/paperless now, most of what Royal Mail delivers now is junk mail, the cost of stamps to send a letter via the post isn’t that cheap either.

Edited by Yabu on Wednesday 26th June 06:35

[A500leroy]

Yabu said:

Government may be dropping the ball, whilst I assume incompetence in most cases with them I do wonder if they would be happy in this case to be rid of the future liabilities of Royal Mail- I’m not sure what financial position it’s in currently, seem to remember it being in news years ago with poor finances years ago, has that all been resolved?
What’s the actual financial state of Royal Mail is looking into the future?

What assets has Royal Mail got? What liabilities does it have? Pension liabilities? What’s the work place/corporate culture like there now? Financial outlook? What’s the financial situation been there the last few years? If you looked into those you could probably come to a few conclusions about the viability of Royal Mail going forward.

Royal Mail made sense to me years ago, post office, letter delivery and parcel force but now the post office is its own thing and neither it or letters are used in the volume they once were and parcel delivery is competitive for custom.

Phone bill, utilities, car insurance, etc , etc are all email/paperless now, most of what Royal Mail delivers now is junk mail, the cost of stamps to send a letter via the post isn’t that cheap either.

Edited by Yabu on Wednesday 26th June 06:35

It is now a parcel company that delivers letters, not a letter company that delivers parcels ( is what we are told on the factory floor)

[PlywoodPascal]

1st class - gets there (eventually)
2nd class - shrug.

[A500leroy]

PlywoodPascal said:

1st class - gets there (eventually)
2nd class - shrug.

No one actually looks at if its 1st or 2nd anymore.

[119]

Should have done it sooner imo.

[PlywoodPascal]

A500leroy said:

No one actually looks at if its 1st or 2nd anymore.

Yeah, cause the Royal Mail aren’t actually delivering the service they are legally required to provide.
It is/has been a cynical and intentional decline in service provision to target greater profitability at the expense of legal responsibilities to provide a functioning postal service.

[Vasco]

It's been going downhill for so long that it's now beyond help. Selling it off to a foreign buyer is just about all that is left after the government has, presumably, recognised that any financial input would now be wasted.
As someone who has only used Royal Mail for a few birthday cards each year recently, I have to recognise that even this basic service may not last.

[wc98]

skwdenyer said:

I may be daft, but why on Earth isn’t the Govt blocking the sale of Royal Mail?

I realise it is now (insanely) a private company, but it is surely a core British asset. Can you imagine the USA privatising the USPS and then allowing a foreign billionaire to buy it?

So far the buyer has made *time limited* assurances to keep the headquarters and tax base in the UK; the Government appears to have applied no binding conditions.

If you believe in Brexit and “taking back control” - or even if you don’t - it is hard to imagine a more blatant example of so much that is wrong with the UK right now.

Or am I just out of step? I can see the merits in some private ownership to secure capital. DHL is a good example of that (being the privatised German postal service). But the German government retained a quarter share, and there’s no chance whatsoever it’s HQ or tax base are at risk of being offshored.

Look at some of the replies you have had so far that, the exact attitude that sees billions sucked out of the nation every single year to foreign owned entities. The same attitude that knows the cost of everything and the value of nothing is what has brought us to where we are today.

The general attitude seems to be, look at the future liabilities and see who those liabilities can be offloaded onto instead of addressing them. Too difficult, not possible etc etc is what you will hear. Then lo and behold foreign owner takes over and actually makes a good go of the business while a handful of shareholders and a few execs get a bit richer after the sell off.

It's just as well London based bankers are so good at what they do or we would be much further down the road of becoming a worn out husk of a country with bugger all to offer anyone. Once the next two generations of retirees and their kids have spent the index linked pensions and retirement investments (i don't have a problem with either, good on them and i wish them all a long and happy retirement) and the global corps realise there is bugger all money left in the UK it's not going to be a pretty sight.

My head is in a fairly gloomy place at the moment regarding the future of the UK, mainly due to the state of politics and no sign of any improvement on the horizon so i realise the above may be a bit over the top.

[Vasco]

All very true.

We're very poor at identifying downward trends sufficiently far in advance. By the time we realise the losses it's taken too much time and will cost too much to correct.

[grumbledoak]

It's a parcel delivery company with a millstone around it's neck. Who cares who owns it? Good luck to him.

[isaldiri]

So how far do you want to extend protectionism and nationalism across the economy? For something that is viewed as being vital to national security, perhaps it might be a bit more relevant to ensure it remains 'British' (whatever that means) with HQ here but for mail delivery.....?

[Mrr T]

wc98 said:

skwdenyer said:

I may be daft, but why on Earth isn’t the Govt blocking the sale of Royal Mail?

I realise it is now (insanely) a private company, but it is surely a core British asset. Can you imagine the USA privatising the USPS and then allowing a foreign billionaire to buy it?

So far the buyer has made *time limited* assurances to keep the headquarters and tax base in the UK; the Government appears to have applied no binding conditions.

If you believe in Brexit and “taking back control” - or even if you don’t - it is hard to imagine a more blatant example of so much that is wrong with the UK right now.

Or am I just out of step? I can see the merits in some private ownership to secure capital. DHL is a good example of that (being the privatised German postal service). But the German government retained a quarter share, and there’s no chance whatsoever it’s HQ or tax base are at risk of being offshored.

Look at some of the replies you have had so far that, the exact attitude that sees billions sucked out of the nation every single year to foreign owned entities. The same attitude that knows the cost of everything and the value of nothing is what has brought us to where we are today.

The general attitude seems to be, look at the future liabilities and see who those liabilities can be offloaded onto instead of addressing them. Too difficult, not possible etc etc is what you will hear. Then lo and behold foreign owner takes over and actually makes a good go of the business while a handful of shareholders and a few execs get a bit richer after the sell off.

It's just as well London based bankers are so good at what they do or we would be much further down the road of becoming a worn out husk of a country with bugger all to offer anyone. Once the next two generations of retirees and their kids have spent the index linked pensions and retirement investments (i don't have a problem with either, good on them and i wish them all a long and happy retirement) and the global corps realise there is bugger all money left in the UK it's not going to be a pretty sight.

My head is in a fairly gloomy place at the moment regarding the future of the UK, mainly due to the state of politics and no sign of any improvement on the horizon so i realise the above may be a bit over the top.

The best data I can find is.

https://commonslibrary.parliament.uk/research-brie...

Inward FDI £2bn
Outward FDI £1.8bn

[DeejRC]

I’m genuinely staggered that anybody would wish to buy it!
I’m also genuinely staggered that anybody would consider it a core National strategic interest in the 21st C.

[President Merkin]

isaldiri said:

So how far do you want to extend protectionism and nationalism across the economy? For something that is viewed as being vital to national security, perhaps it might be a bit more relevant to ensure it remains 'British' (whatever that means) with HQ here but for mail delivery.....?

Yeah, it's not as if privatising core ssets has ever resulted in unforeseen detriments to the public before now is it? There is absolutely no way for example, anyone awaiting a cancer appointment or perhaps something that can't be emailed like an NIP or similar could ever get relegated into the next week pile in the untramelled rush for profit.

Something to contemplate while you wait for your £400 train that's delayed two hours.

[skwdenyer]

DeejRC said:

I’m genuinely staggered that anybody would wish to buy it!
I’m also genuinely staggered that anybody would consider it a core National strategic interest in the 21st C.

A universal flat-rate mail service is a critical piece of infrastructure, without which large swathes of stuff stops working.

That one can leverage that infrastructure to feed the currently-insatiable demand for parcel deliveries is a huge advantage. I mentioned DHL for a reason - the Deutsche Poste was parlayed into a world-leading, massively-profitable international mail and parcel operation.

The failure to understand what was there is why it was flogged off in the first place...

[wc98]

Mrr T said:

The best data I can find is.

https://commonslibrary.parliament.uk/research-brie...

Inward FDI £2bn
Outward FDI £1.8bn

Thanks for the link. It's probably my lack of understanding but i think we may be talking about different things. I meant the profits from UK companies mainly or wholly owned by overseas entities that used to be owned by UKPlc or UK based individuals.

[skwdenyer]

Yabu said:

skwdenyer said:

I may be daft, but why on Earth isn’t the Govt blocking the sale of Royal Mail?

I realise it is now (insanely) a private company, but it is surely a core British asset. Can you imagine the USA privatising the USPS and then allowing a foreign billionaire to buy it?

Government may be dropping the ball, whilst I assume incompetence in most cases with them I do wonder if they would be happy in this case to be rid of the future liabilities of Royal Mail- I’m not sure what financial position it’s in currently, seem to remember it being in news years ago with poor finances years ago, has that all been resolved?
What’s the actual financial state of Royal Mail is looking into the future?

What assets has Royal Mail got? What liabilities does it have? Pension liabilities? What’s the work place/corporate culture like there now? Financial outlook? What’s the financial situation been there the last few years? If you looked into those you could probably come to a few conclusions about the viability of Royal Mail going forward.

Royal Mail made sense to me years ago, post office, letter delivery and parcel force but now the post office is its own thing and neither it or letters are used in the volume they once were and parcel delivery is competitive for custom.

Phone bill, utilities, car insurance, etc , etc are all email/paperless now, most of what Royal Mail delivers now is junk mail, the cost of stamps to send a letter via the post isn’t that cheap either.

Edited by Yabu on Wednesday 26th June 06:35

When the Government "sold" the Royal Mail (by a float) in 2013, the Government took over the RM pension scheme. The potential liability then was £38bn, which has now grow to over £50bn.

The Government also got the pension fund's assets. Then-Chancellor George Osborne used those assets to reduce Government's short-term debt - which netted £17bn. A lot of those assets were gilts, which were just given back to the Treasury for free, creating a loss of £11bn.

So was the privatisation massively profitable for the taxpayer? Of course not. All that sleight-of-hand over the pension was used to generate less than £2bn in initial sale proceeds.

Even better, about a third of the float shares were pre-sold on preferential terms to hedge funds, who flipped them for almost double what they paid for them in days.

The ultimate proceeds from privatisation were £3.3bn or so. RM has been paying out dividends. Kretinsky is borrowing £2.3bn to part-fund the acquisition, saddling the business with enormous requirements to service his debts. This is on top of the business' existing £1.7bn - which include £1.4bn of bonds with potential pay-on-change-of-control requirements.

The magic of course is in the property assets. RM owned 1000 freeholds and 1000 leasholds at flotation. It has sold quite a few off, and banked big profits - and paid them out. It is hard to know what they're really worth, because they're carried at historic cost on the balance sheet.

And how big were those dividends? By 2018, RM had paid out over £1bn in dividends. That's money the taxpayer could have had "for free." The return for investors has been terrific - to get back 33% of your stake in 5 years, and still to own the underlying asset, is a pretty nice return. Especially when the cash to pay those dividends came from debt, which the future business has to service (currently about £100m pa).

The failure of the public to understand the big picture of the sell-off of national assets and, even now, to misunderstand what value is in the business, is really quite extraordinary. Once the takeover is complete, expect to see asset sales to "related" parties at prices which turn out to be rather low, followed by a destruction of the business...

[F1GTRUeno]

I honestly don't give a st about who owns it as long as it works.

[valiant]

People still rely on letters even in this day and age. The NHS still sends millions out not everyone does email (mainly old dudes) and that’s just one organisation that still relies on it.

It is also a critical part of the countries parcel delivery service. When they went on strike a while back, the private couriers couldn’t cope with the extra demand placed on them and what of the staff? They may have assurances now but that will change when you have a RM worker on a decent wage and hours and then you have a private courier who has to pay for his van, his fuel, cover his own shift when ill or on holiday and has to work 80+ hrs a week to make a decent living. Do you think we think that this race to the bottom is acceptable because RM will eventually go down that route.

No, as soon as the ‘last mile letters’ guarantee is dropped, it will be asset stripped, loaded with huge debt whilst having huge divis taken out of it, left with demoralised staff as anyone good would have long left and then handed back to HMG to sort. It will go the same way as Thames Water.

Billionaires are not billionaires because they *think* they can do it better. They’re billionaires because they think long term, are utterly ruthless and couldn’t give a st about any consequences to anyone else once they’ve got what they want out of it.