Royal Mail bids fall short of expectations

The Government says it remains committed to selling a stake in Royal Mail, despite speculation that it is considering ditching its plans after failing to secure a high enough bid.

CVC Capital Partners, the private equity group, has emerged as the frontrunner to take a 30% stake in the postal services group, but its offer of less than £2bn has thrown question marks over how the Government now plans to proceed.

However, Business Secretary Lord Mandelson maintains that it still plans to forge ahead with its plans, according to reports over the weekend (May 31).

The Dutch postal group TNT has been named as the other key bidder, but its offer is lower still than CVC Capital Partners.

TNT investors have already voiced concern over plans to take on a stake in Royal Mail’s profitable parcels arm, General Logistics Systems (GLS), headquartered in Amsterdam.

They are worried about the rise of online services and the enormous pension deficit Royal Mail is struggling to fund.

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