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For sale: but who will buy?

23rd July 1992, Page 16
23rd July 1992
Page 16
Page 16, 23rd July 1992 — For sale: but who will buy?
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Which of the following most accurately describes the problem?

• Last week's announcement that Parcelforce is to be privatised ended more than two years of speculation.

The Post Office subsidiary was set up with the aim of eventual separation from the Royal Mail and in recent months rumours of an imminent sell-off were fuelled by £.250m of Post Office money for a five-year development plan, the dropping of the words 'Royal Mail' from the Parcelforce name and moves to attach Datapost to its portfolio.

The Conservative general election victory sealed Parcelforce's fate.

But who will buy Parcelforce? Its considerable assets have to be offset against considerable losses — £24m this year, £75m last year — although directors claim it made a marginal £3m profit in the second half of 1991/92. The operation has 13,000 staff, 9,000 vehicles and 165 depots.

Parcelforce managing director Peter Howarth is keen to lead the favoured option, which is some form of employee/management buyout. This has the support of the trade unions. Board of Trade president Michael Heseltine, who announced the sell-off in Parliament, has promised funds to enable such a bid to be mounted — but will not finance any purchase plan.

"I would be happy to lead a management buyout," says Howarth.

The whole Parcelforce board will be involved in putting together the purchase plan but the key architects will be Howarth, finance director Malcolm Kitchener, and commercial director Michael Healy.

Howarth welcomes a pragmatic approach from the Union of Communication Workers, which is set to back an employee/management buyout as the best option for preserving jobs. He describes UCW general secretary Alan Tuffin as a responsible trade union leader.

Parcelforce unions and management — led by Post Office chairman Sir Bryan Nicholson — were due to meet on Tuesday (21July) to consider the options.

"The days of huge campaigns against privatisation are over," says a UCW spokesman. "Our major concern is that the terms and conditions of our members' jobs are not adversely affected." The union's greatest fear is that a predator will take over, leading to "job losses, asset stripping and a raid on the pension fund surplus".

But the UCW believes this is unlikely: "Heseltine's statement that money would be available to mount an MBO bid suggests that the only people daft enough to buy the company during a recession are the employees," it says.


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