Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
#1
Secretary of State for Business Vince Cable....
Royal Mail was worth £10bn, said JP Morgan. It sold for £6bn lessInvestment bank gave valuation before flotation, as unions accuse government of 'conspiracy against taxpayer'
One of the world's largest investment banks told ministers ahead of theRoyal Mail flotation that they could sell the postal business for £10bn, around two and a half times more than the government finally received for it.
News of the valuation from JP Morgan re-ignited the huge row over theprivatisation with Billy Hayes, the postal workers union leader, claiming a "conspiracy against the taxpayer" and demanding the sacking of Vince Cable as business secretary.
The government sold shares in Royal Mail for 330p each, valuing the business at £3.3bn on 11 October. But the shares rocketed in value by almost 40% that day alone and closed at 529p, making the company worth more than £5bn.
The official float figure excluded around £800m of debt, which included would give the state-owned business an "enterprise value" of £4.1bn but still almost £6bn lower than the price tag suggested by JP Morgan.
The US bank declined to comment but well-placed sources confirmed the figure of £10bn and made clear that others pitching to sell the Royal Mail on behalf of the government had also priced the mail company as high as £7bn.
The Department of Business said a whole range of different price tags had been put on Royal Mail at different stages of the sell-off process which was conducted in the most thorough way. "The banks' proposals came months before any threat of strike action by the unions, financial market uncertainty in the United States and other factors which the government has already said were taken into consideration in setting a price for the company in September," said a spokesman.
Hayes, the general secretary of the Communication Workers Union, said: "On the opening day of the flotation Vince Cable wrote off the undervaluation as froth. A week later, we were told it was the fault of the CWU. We now have a prima facie case of a conspiracy against the UK taxpayer who were opposed to the sale and have now been robbed of billions. In any other walk of life this would be a sacking offence and we call on Vince Cable to resign. A full inquiry should be launched into the mis-handling of this unnecessary privatisation by Vince Cable. We would also like the matter to be referred to the public accounts committee to scrutinise how badly the taxpayer has been left out of pocket.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
#2
Well, as we have been baldly informed, as JPM does have experience in these things they are entitled to pass judgement.
That Brian Dixon was right all along is perhaps mere coincidence.
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 745- Registered: 27 Mar 2012
- Posts: 3,370
#3
Reg
So will the labour party take it all back without compensation??
Guest 698- Registered: 28 May 2010
- Posts: 8,664
#4
JPM's valuation represents a historic earnings multiple of about 30. With other stocks in the transport sector averaging a p/e of 15-20, I find it hard to take a £10b price tag seriously, especially with the strategic challenges the business faces going forward.
The particular size of the business has created its own issues - being just above the threshold of FTSE membership at its present share price means that every FTSE tracker fund in the world has to have a piece of it. It's my feeling that, although 330p might turn out to be on the low side, better that way than to have priced it at £5+ and seen it flop.
JPM are merely displaying pique that they didn't land the deal. If they had, it would have flopped but they would still have had their fees.
The final proof will not be available until the Government's remaining 48% stake is sold.
And here's an example of JPM's recent track record in getting markets right.
http://dealbook.nytimes.com/2012/06/28/jpmorgan-trading-loss-may-reach-9-billion/?_r=0
Getting JPM to value your company is like getting a burglar to value your jewellery.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
#5
There is always a challenge going forward, why should anybody or anything suppose that the future will be challenge-free?
If 'flop' was the reality, how terrible would that be, and for whom? Surely the core issue is the public asset, and not the bargain-basement sale.
As for the rush to offload the remaining public stake. Is it enough that this should be done simply to prove a point, when state involvement in large-scale enterprises brings so much revenue to France/EDF etc.?
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 698- Registered: 28 May 2010
- Posts: 8,664
#6
Royal Mail faces particular challenges:
- highly unionised workforce still with embedded Spanish practices. Free shares might help this one although the postal workers I know all say, thank you very much but it's still business as usual. All the changes imposed in recent years, while being dressed up as 'efficiencies' have worsened customer service.
- physical transit of letters declining rapidly and the RM needs massive investment to compete with more efficient movers of things.
- advantages of prior connection with PO Counters now lost.
- poor service and high prices still driving people away. Why should I bother going to the post office to send a packet when I can phone Yodel, or similar, and they will collect it from my house, track it electronically on-line, deliver reliably and charge me less?
All these things make RM less attractive to investors; it's certainly now one of the riskier 'utility' stocks in the FTSE. Never mind, I have a good appetite for risk.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
#7
'Strategic', 'particular' - tom-ah-toe, tom-ay-toe.
-All utilities that have been covertly or overtly ear-marked for Privatisation have first been run-down, either materially or by propaganda, and often both.
-Unions, are just what managements make of them. It is this relationship that is the British disease, elsewhere things are entirely different, but if it is an easy excuse that you are looking for Unions will do. It also has to be noted that such is habit-forming.
-Yes, lo-and-behold, letter writing is on the decline, but why then with mention of 'Yodel' is the talk of 'packet'?
Less attractive to investors? Royal Mail then does not own much property in particular and strategic city-centre locations?
A Carpet-Baggers Bonanza.
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Keith Sansum1
- Location: london
- Registered: 25 Aug 2010
- Posts: 23,948
#8
Always good tome for peter to blame the unions
unions do what they can for the workforce, whilst working with the managers to get a better industry
unfortunatly this often falls down because managers dont want to work with unions
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Guest 698- Registered: 28 May 2010
- Posts: 8,664
#9
8, Keith, how naive are you? You trot out what it says on the tin, but that is manifestly not what lies within. If your assertion were true, I would be the first to support them. But we still have union leaders who regard themselves as a major political force, hence many of Miliband's problems.
Let's see how the unions come out of the Grangemouth affair, where their 'doing what they can for the workforce' has resulted in 800 job losses and 2000 sub-contractors laid off.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Keith Sansum1- Location: london
- Registered: 25 Aug 2010
- Posts: 23,948
#10
thats also(the last 2 lines) incorrect on gragemouth
and should be noted the workforce voted for that action
since then unite has attempted to find a deal
Not sure what you want with the royal mail workers?
i suspect your talking along going back to victorian days when you beg for a job at the gate?
thought on barryw pushed that line
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Guest 698- Registered: 28 May 2010
- Posts: 8,664
#11
Keith Sansum1 wrote:thats also(the last 2 lines) incorrect on gragemouth
and should be noted the workforce voted for that action
since then unite has attempted to find a deal
Since then the union has backed off and the plant is re-opening on management's terms.
Last para: I want the RM workers to be happy in their jobs, and to provide the best possible customer service. Only then will the business flourish.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Keith Sansum1- Location: london
- Registered: 25 Aug 2010
- Posts: 23,948
#12
you could say peter the unite union went against its own members mandate in the interest of the company survival
thats show how unions can be responsible (grangemouth)
Im sure the workers of royal mail and the owners agree and wish to do the same
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Guest 698- Registered: 28 May 2010
- Posts: 8,664
#13
Keith, the union's bluff was called at Grangemouth. They don't represent their members, they represent McCluskey and his political ambitions.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Keith Sansum1- Location: london
- Registered: 25 Aug 2010
- Posts: 23,948
#14
Not at all peter
a democratic ballot took place as your aware
im unaware of the unite leaders political ambitions
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Guest 698- Registered: 28 May 2010
- Posts: 8,664
#15
Then you have not been following Mr M's attempts to impose parliamentary candidates on the Labour Party.
Yes, a democratic ballot. Of the minority of workers who are union members, and the minority of those who voted. And not considering the 2000 sub-contractors.
A friend of mine has an electrical engineering business in Polmont. His business is almost all from Ineos at Grangemouth. He is not a member of any union but has been facing the likely collapse of his business and unemployment for himself, his wife and their three sons. All thanks to the pig-headedness of the Unite leadership who fancied a fight with the big, bad employer.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Keith Sansum1- Location: london
- Registered: 25 Aug 2010
- Posts: 23,948
#16
Your opinions on trade unions are clear in your last post peter
much as i indicated earlier #
but thanks for the confirmation
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howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#17
i have only seen the headline and brief details but a lot of people are losing out over this.
not only the job losses and sub contractors but also the shops, cafes, pubs etc that depended on the plant.
Keith Sansum1- Location: london
- Registered: 25 Aug 2010
- Posts: 23,948
#18
which unite rightly tried to find a solution
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Guest 698- Registered: 28 May 2010
- Posts: 8,664
#19
Unite took it to the wire and had their bluff called.
Trade unions are mostly great institutions, but some get ideas above their station.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Keith Sansum1- Location: london
- Registered: 25 Aug 2010
- Posts: 23,948
#20
unite followed its members instructions
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