IDS acquisition update

As you will be aware, on 29 May 2024 the Board of International Distribution Services plc (IDS) announced that it is recommending an offer from EP Group to acquire the business. Further details can be found in the offer document.

This morning it has been announced that the Government has accepted the legally binding undertakings we put forward and added some further requirements. 

EP Group has also announced it has reached agreement with our trade unions Unite CMA and the Communication Workers Union (CWU) on principles for future working and USO reform, subject to successful completion of the acquisition.

It is important to note that there are further regulatory approvals outstanding, including national security clearance and European approvals, so this is not the end of the process. The acquisition will only go ahead if:

1. Shareholders holding 75% of IDS shares accept the offer and
2. The relevant regulatory authorities approve the transaction

If these conditions are satisfied, the acquisition will complete and IDS will become a private company owned by EP Group. This is currently expected to take place in the first quarter of 2025.  

Government approved undertakings

As announced in May, the IDS Board negotiated a comprehensive package of legally binding undertakings and contractual commitments as part of the proposed acquisition. The Board required EP Group to offer the undertakings to the UK Government. 

This morning EP Group and the Government have announced that the Government has accepted the undertakings we put forward and has added some further requirements. This marks an important milestone in the takeover process and we welcome the Government’s endorsement of and legal backing for the undertakings.

What are the undertakings, and what is new?

The undertakings and commitments already negotiated by the IDS Board include, amongst other things:

• The provision of the Universal Service Obligation (USO) and ensuring Royal Mail’s compliance with regulatory conditions imposed by Ofcom (including the one-price-goes-anywhere service in the UK and First Class letters still delivered six days a week)
• Use of the “Royal Mail” trading name and commitment to IDS and Royal Mail being UK headquartered and tax resident
• A series of financial safeguards to prevent EP Group from returning or distributing value from Royal Mail by, for example, transferring Royal Mail’s assets (e.g. property, pensions, cash) or granting security or guarantees over Royal Mail assets unless certain conditions are met
• Restrictions on change of control of both Royal Mail and GLS
• Recognition of existing unions.

Following discussions with the UK Government, EP Group have agreed to further strengthen the undertakings:

• Extending the undertakings related to the provision of the USO and Royal Mail name and use of the Royal Cypher so that they are no longer limited to a five year period but continue until there is a change of control
• Further strengthening certain financial safeguards
• Requiring prior consent from the UK Government for any changes to UK headquarters and UK tax residence of Royal Mail through a ‘special share’
• Requiring EP Group to negotiate in good faith with the CWU and Unite CMA and use reasonable commercial endeavours to conclude agreements with both unions (see below)
• Ensuring that Royal Mail consults with the UK Crown Dependencies and Overseas Territories where it provides postal and other services on any proposed changes to services, and continues to participate in and contribute to the Universal Postal Union, and
• Maintaining IDS’ existing commitments to reduce its environmental impact, with the aim of the Royal Mail Group reaching Net Zero by 2040 and the GLS Group reducing CO2 emissions to zero by 2045.

For more details on the undertakings and the specified periods they apply for, see the two announcements from EP Group - Government undertakings and Agreements in Principle with CWU and CMA Unite.

EP framework agreements with Unite CMA and CWU

EP Group have been holding discussions with Unite CMA and the CWU in recent months. As part of the takeover process EP Group have reached agreement with our trade unions on some principles for future working and USO reform. 

These agreements will be subject to successful completion of the acquisition and provide a framework for future discussions between Royal Mail our trade unions.

These agreements will cover areas such as:

• How both trade unions will continue to engage with Royal Mail post-acquisition
• How we will work together to secure reforms to the USO that work for our colleagues, customers and company
• A series of topics where Royal Mail management will negotiate with the CWU and Unite CMA, including pay, terms and conditions.

Further details on the principles agreed will be announced in due course, and we will keep you updated over the coming months on any further developments.

This series of announcements today mark positive progress in the takeover process, bringing the prospect of acquisition one step closer and providing important clarity for the future of our business.

How do I accept the offer?

The offer remains open for acceptance. The process for accepting the offer depends on the way you hold your shares, so for more detail please see our reminder of how to accept.

Where can I get more information?

All documents and communications relating to EP Group's offer to acquire IDS can be found at: Recommended Offer for IDS plc by EP UK Bidco Limited

If you have questions or would like to clarify how to accept the offer, please contact the Shareholder Helpline on +44 (0) 333 207 6505.

RM Communications