Offer for IDS plc

by EP UK Bidco Limited

Recommended cash offer to acquire International Distribution Services plc and legally binding undertaking and commitments.

As you will be aware, last month EP Group - an affiliate of our largest shareholder Vesa Equity - made a possible offer for International Distribution Services plc of 320 pence per share. This was rejected by the IDS Board.

EP Group subsequently improved its possible offer and today the Board of IDS announced that it intends to recommend an offer to shareholders at a total value of 370 pence per IDS share.

Hear from Martin Seidenberg, Group CEO here.

The full details of the Offer are set out in the 2.7 announcement (the document containing the formal offer to acquire the business) which can be found here.

This briefing note click here provides a summary of key elements of the Offer and should be read alongside the 2.7 announcement in full.

Why the Board is recommending the Offer

The Board believes that the terms of the Offer from EP Group are fair and reasonable. The Offer represents a significant premium (72.7%) above the share price of 214 pence at the close of business on 16 April 2024, the last business day before the commencement of the offer period.

The Offer reflects the value of GLS’s current growth plans and the progress being made on change at Royal Mail, as well as the execution risks associated with delivering longer term value for shareholders, for example Universal Service reform, delivery of the turnaround and the investment needed, for example on Out-of-home and network improvements.

Importantly, the Offer includes a series of legally binding undertakings and commitments that reflect Royal Mail’s unique role in society and protect the Universal Service and employee and wider stakeholder interests.

Summary of key legally binding undertakings and commitments and EP Group’s intentions for the business

Royal Mail has a unique heritage and responsibilities as the designated Universal Service Provider in the United Kingdom, is one of the country’s largest employers and is a key part of national infrastructure.

Given this, the IDS Board has negotiated a range of legally binding undertakings and commitments with EP Group to safeguard the Universal Service and employee and stakeholder interests.

The IDS Board believes that the undertakings to be offered to the UK Government and the other contractual commitments provided by EP Group constitute a comprehensive package of protections for IDS, Royal Mail and GLS.

They provide customers, employees, unions, regulators and broader stakeholders with safeguards in areas such as:

The provision of the one-price-goes-anywhere Universal Service Obligation (including First Class letters still delivered six days a week)
Maintaining the Royal Mail brand
Royal Mail’s commitment to the United Kingdom
The maintenance of employee benefits, including pensions, for the Group’s employees
Union recognition
Ensuring there is no change of control of Royal Mail and GLS
Governance and transparency
Financial safeguards for Royal Mail
Continued commitment to sustainability.

For all of the detail, including timeframes and durations, please see the main 2.7 announcement document.

Next steps

EP Group will provide shareholders with an offer document within 28 days of this announcement (or later if the Takeover Panel permits) which will set out in full the terms of the offer and what steps shareholders need to take.

The Offer is conditional upon a number of regulatory processes, including by the UK Government.

The Acquisition is currently expected to complete during the first quarter of 2025.

We understand that our people will have lots of questions and, as such, we have pulled a number of resources together to help you:

Let’s keep focused on delivering our plan for this year

Whilst we know this news comes with uncertainty, there is also opportunity.

EP Group is a private, long-term investor with substantial access to capital and significant knowledge of the postal, logistics and distribution sectors.

EP Group’s main goal is to develop IDS into one of the leading postal logistics players in Europe. It recognises this will require successful transformation, including Universal Service reform, and investments in modernisation and Out-of-home solutions, such as lockers.

EP Group also recognises this can only be achieved as a team.

To reach our potential though, we need to press on with delivering our plan for this year.

We’ve already come a long way thanks to you and your efforts. Let’s continue on this path together and make this year a real success!