Canada to sell Canada Post at $20.3B, but that’s not the end of it
Canada Post said it will sell Canada’s postal service at a record $20 billion valuation in an effort to bring its business back from the brink of collapse.
The move comes a week after it reported that its revenues had fallen by more than $1 billion in the previous three years.
The news comes as Prime Minister Justin Trudeau has been touting his country’s recovery from the Great Recession, a recovery that has been helped by the postal service’s rapid expansion.
But with the Canadian dollar plummeting and Canada Post struggling to pay its employees, the company has been struggling to keep pace.
The Canadian Postal Union (CPU) said Monday that it will be raising the $15.6 billion it will pay its 1.3 million workers in 2019, and the union expects the price tag to climb even higher in 2019.
The union’s president says the price increase would take into account all costs associated with a $20-billion restructuring, including pensions, health care and education.
Canada Post had already raised the price of its mail to the public last year by about $8 a piece.
It said Monday it was going to increase the price to the general public by $20 a piece, bringing the total to $40 a piece in 2019 and $50 in 2020.
Canada post said the new price would come from the sale of certain assets and the purchase of new businesses.
The Postal Services Board of Governors voted Monday to approve the transaction.
The deal would give Canada Post control of its most profitable business and the largest in Canada.
The company has also been trying to raise revenue to shore up its finances.
It has invested $1.8 billion in a new mail division, and it has also announced plans to sell off some of its assets and to build a new network of new mail sorting facilities.
In addition, Canada Post has raised its dividend by more $4 a share over the last year.
Canada has seen a decline in its postal revenue over the past two years, from $4.4 billion in 2016 to $3.8 bn last year, according to the National Post.
The Canada Post is the second-largest postal service in Canada after the Canadian Union of Postal Workers (CUPW).
The union is also pushing for a pension plan and new bargaining rights for workers.
But some economists say Canada Post’s stock price could drop even further if the company continues to struggle.
Canadian Postal Chief Executive Guy Caron said in a statement Monday that he is confident the company will remain profitable in the long term, but he acknowledged that Canada Post faces some challenges ahead.
“Canada Post is a unique company with a history of growing and challenging the industry,” Caron wrote.
“As the post office continues to face difficult times, we need to be realistic about the future.
We have to get back to a business model that is sustainable for the long-term and that can be sustained.”
Canada Post expects its mail business to expand to 7.3 percent of the economy in 2019 from 5.5 percent in 2019 after the sale, according the Postmaster General’s Office.
The announcement comes as the postal system continues to fight a series of legal battles to retain workers, particularly at Canada Post offices in Ontario and Quebec.
The province has taken action to reduce workers’ pay by cutting their pension benefits and severance packages.
In Ontario, the union is challenging a new collective agreement that could affect Canada Post workers in other parts of the country.
Canada’s unions have been fighting to keep the government’s postal reforms in place.
Trudeau said Monday the federal government would “fight tooth and nail” to keep postal workers’ jobs.
“We’re going to continue to do everything we can to ensure that every Canadian gets a fair and affordable post office,” he said at a news conference.