UK pulls plug on multibillion Royal Mail deal

The UK government has decided to put the partial privatisation of the Royal Mail on hold in the current market downturn, as a sale in today’s market would not ensure value for taxpayers, according to business secretary Peter Mandelson. CVC had reportedly offered £2bn for a stake in the state-owned mail service but was rebuffed.

The partial privatisation of the Royal Mail has been put on hold because the market would not ensure taxpayers derive value from the sale, Peter Mandelson, the UK's secretary of state for business, said Thursday in a speech to the House of Lords.

“There is therefore no prospect in current circumstances of achieving the objectives of the Postal Services Bill,” Mandelson said. “When market conditions change, we will return to the issue.” The UK was looking to sell up to a 30 percent stake in the state-owned agency, but would have needed to pass a bill to do so.

The UK government “thoroughly tested the market” looking for partners in the deal, but “economic circumstances … are extremely difficult. I have always been clear that we would do a deal with the private sector only if it represented value for money for the taxpayer”, Mandelson said. His support for a potential private equity deal was one of the themes he touched on in March, when he was the keynote speaker at the British Venture Capital Association's annual gala.

Private equity giant CVC was reportedly interested in buying a stake in the Royal Mail, according to media reports earlier this year. The Financial Times reported CVC offered about £2 billion for a stake, but the government rejected the offer as too low. CVC, which closed its €11 billion Fund V in January, has done similar postal deals in other European countries including Belgium and Denmark.