Israel vs snail mail: Panel green-lights sale of stake in postal company

Ministerial committee approves sale of 40% of firm: half to private investor, half in public offering of shares on the Tel Aviv Stock Exchange

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

A postal worker stands in the selection hall at a post office in Tel Aviv February, 22, 2010. (Yossi Zeliger/Flash 90)
A postal worker stands in the selection hall at a post office in Tel Aviv February, 22, 2010. (Yossi Zeliger/Flash 90)

Israel has set out plans to privatize its state-owned postal services after years in which the company has been suffering from a drop in profitability and cash flow and from increased competition from alternative services.

On Monday, a ministerial committee in charge of the privatization of government held companies approved the sale of a 40 percent stake in the firm. An initial 20% stake will be sold via a private tender to a strategic investor in Israel or abroad. The remaining 20% stake will be sold off, within two years of the sale of the initial tranche, in a public offering on the Tel Aviv Stock Exchange, the Finance Ministry said in a statement.

The listing of shares will bring about an increase in transparency, profitability and efficiency in the long term, the statement said. After the sale, the government stake in the firm will be no less than 60%, the statement said.

The strategic investor must commit to hold the shares for seven years and will be allowed to have an influence over choosing the company’s management team. Should the government fail to find an investor, then the full 40% stake will be sold on the stock exchange, the statement said.

To protect the state’s interests, Israel may consider conditioning any holding greater than 5% upon approval.

The postal company has been criticized in recent years for poor service, with letters arriving, if at all, with delays, and long lines at service centers.

Since 2015 the company has undertaken a restructuring plan that envisaged the opening of new distribution centers, a reorganization of its operations and a cut in employees.

Greater efficiency at the firm and its entry into new financial avenues — together with new partners — will help improve company results by “tens of millions of shekels a year,” the statement said.

The statement also said that the privatization is a step forward in the process of separating the company’s financial services from its postal services. The Finance Ministry is seeking to transform the postal bank into an “independent social bank that provides the best services to the Israeli public,” the statement said.

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