Royal Mail should be broken up, says top City asset manager

Top City firm Alliance Bernstein has called for Royal Mail to be split up.

At the moment Royal Mail has two arms, the UK Parcels, International and Letters division and General Logistics Systems (GLS) – a parcel delivery company based in Europe.

Bernstein wants to see GLS sold, now that former chief executive Rico Back – a supporter of the business – has left.

Daniel Roeska, analyst at Bernstein, said: “We believe it would be in shareholders’ best interests to split the company in two and let shareholders themselves decide on the future of the two businesses.

“If GLS stays within the group, we see a substantial risk that cash flows from it or sale proceeds will be consumed in part by the UK Parcels and Letters transformation.

“In its current form, Royal Mail Group is worth less than the sum of its parts. Why is Royal Mail the best long-term owner of GLS?”

Royal Mail has had a difficult two years, plagued by letter declines and fights with unions.

Problems have been exacerbated further by coronavirus lockdown and the group’s results on Thursday are likely to be poor.

The company is currently being led by chief financial officer Stuart Simpson, while it searches for a permanent chief executive.