Revised possible offer

As you will be aware from our previous announcement, on 17 April 2024 EP Group, an affiliate of our largest shareholder Vesa Equity, previously made a possible offer for International Distribution Services plc (IDS), the parent company of Royal Mail, at £3.20 per share.

The IDS Board rejected the £3.20 possible offer on the grounds that it was opportunistic and significantly undervalued the group and its future prospects.  

EP Group has subsequently improved its possible offer to a total value of £3.70 per share. The total value of the revised proposal represents a 72.7% increase on the share price at the close of business on 16 April 2024, the day before the offer became public. The latest proposal follows significant negotiation including a number of earlier proposals from EP Group. 

We are acutely aware of the importance of Royal Mail’s unique role as the Universal Service provider, a major UK employer and a key part of national infrastructure. The Board has sought, and EP Group has agreed to offer as part its non-binding proposal, a set of contractual undertakings and commitments.

• Under the proposed contractual commitments, key elements of the proposals Royal Mail has put forward for a financially sustainable Universal Service in the future, namely a one-price-goes-anywhere service for the entire United Kingdom and the continuance of six-day delivery for First Class letters, would be maintained.
• EP Group has agreed to offer contractual commitments to protect employees’ current rights and continue to recognise the existing unions of both Royal Mail and GLS.
• The parties agree that Royal Mail’s name and brand should be protected
• Royal Mail should remain headquartered and tax resident in the United Kingdom.

If a firm offer is made by EP Group which is recommended by the Board, the parties will enter into a legal agreement between EP Group and IDS in which these commitments will be recorded. 

Having considered the Proposal, the Board has indicated to EP Group that it would be minded to recommend an offer to IDS shareholders if a formal offer is made at a total value of £3.70, subject to satisfactory resolution of the final terms and arrangements.  

We have therefore extended the deadline for discussions to 29 May 2024 at 5pm so that we can explore the offer in further detail and for each party to complete a limited period of due diligence on the other. 

We recognise that colleagues will have many questions about what this means. As discussions progress we are limited on what we can say, but please be assured that we will update people as soon as we can.   

For now, we should all remain focused on continuing to deliver a great service to our customers. 

You can view the announcement we have just made to the market here and view some key questions and answers here. 

We ask that all managers use this WTLL briefing to make their team aware of the latest development.