LONDON, UK: A newly formed company owned indirectly EP Corporate Group and J&T Capital Partners reached agreement on the terms and conditions of a recommended cash offer for the entire issued, and to be issued, ordinary share capital of International Distribution Services plc (IDS), other than the IDS Shares owned or controlled by VESA Equity Investment.
As at 28 May 2024 (being the last Business Day prior to the date of this announcement), VESA owned or controlled 264.138 million IDS Shares, representing approximately 27.6% of IDS’ issued ordinary share capital as at such date.
Under the terms of the acquisition, each International Distribution Services plc shareholder will be entitled to receive 370 pence/share including 10 pence as dividend.
The total value per IDS share represents a premium of approximately 72.7% to the IDS Closing Price of 214 pence on 16 April 2024 (being the last Business Day before the commencement of the Offer Period).
The total value values International Distribution Services plc entire issued, and to be issued, ordinary share capital at approximately £3.568 billion on a fully diluted basis, and implies an enterprise value of £5.284 billion.
It is intended that the acquisition will be implemented by way of a takeover offer for the purposes of Part 28 of the 2006 Act.
Commenting on this announcement, Keith Williams, the Chair of IDS, said: “IDS has the potential to become a leading international logistics player. Both the IDS Board and EP are acutely aware of their responsibilities to IDS and particularly to the unique heritage of Royal Mail and its obligations as the designated Universal Service Provider of postal services in the UK.
The IDS Board has negotiated a far-reaching package of legally binding undertakings and commitments which provide our customers, employees and broader stakeholders with important safeguards. These cover the provision of the one-price-goes-anywhere Universal Service Obligation (including First Class letters still delivered six days a week), the financial stability and maintenance of the IDS Group including Royal Mail, the maintenance of employee benefits and pensions, and ensuring Royal Mail remains headquartered and tax resident in the UK.
The IDS Board wishes to thank our employees across Royal Mail and GLS for the progress which is being made in both companies to transform and adapt to a rapidly changing market in both the UK and Europe.
It is the IDS Board’s belief that EP will continue to enhance IDS’ investment in strategic areas such as network and out-of-home solutions.
The IDS Board believes that the offer from EP is fair and reasonable given that there are uncertainties ahead and allows investors to realise value at a significant premium.”
Commenting on this announcement, Daniel Křetínský, founder and chairman of EP, said: “IDS, and Royal Mail in particular, form part of the national infrastructure of the countries they operate in. More than that, Royal Mail is part of the fabric of UK society and has been for hundreds of years. The EP group has the utmost respect for Royal Mail’s history and tradition, and I know that owning this business will come with enormous responsibility – not just to the employees but to the citizens who rely on its services every day. The scale of the commitments we are offering to the company and the UK Government reflect how seriously we take this responsibility, to the benefit of IDS’ employees, union representatives and all other stakeholders.
The EP group is a patient, supportive investor with a long-term view and decades of experience in owning critical national infrastructure. We are committed investors in the UK and first became a shareholder in IDS four years ago, as we saw the potential for the business to become one of the largest postal logistics groups in Europe. But IDS’ market is evolving quickly, and it must accelerate its transformation and investments into modernisation to keep up with the competition. We will support the business in the next critical phase of its transformation and beyond, providing our experience and financial resilience to support the management team. We look forward to working closely with all of IDS’ stakeholders to deliver against its full potential.”
International Distribution Services (IDS), comprising Royal Mail and GLS, operates in a sector with positive tailwinds and clear future growth opportunities driven particularly by increasing e-commerce penetration, but also faces strong competition in all the markets in which it operates.
GLS is a fully integrated pan-European delivery business, with a successful network, business model and track record of capitalising on growth opportunities. Royal Mail owns and operates an extensive delivery network across the UK, is a key part of the UK’s national infrastructure and benefits from an iconic domestic brand supported by its role as the UK’s sole designated Universal Service Provider.
With progress being made on Royal Mail’s implementation of the Business Recovery, Transformation and Growth agreement entered into with the CWU in 2023, and with further progress on the ongoing transformation of Royal Mail since the appointment of Martin Seidenberg as Chief Executive Officer, IDS has been put on stronger footing. However, headwinds remain, due to difficult macroeconomic and competitive environments and continued letter volume decline, and further investment is required to successfully deliver a return to growth and profitability.
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