NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO CERTAINTY THAT ANY OFFER WILL BE MADE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

15 May 2024

International Distributions Services plc
("IDS" or the "Company")

Statement regarding a revised possible cash offer

Extension of PUSU deadline to 29 May 2024

The Board of IDS (the "Board") confirms that it has received a revised non-binding proposal from EP Corporate Group a.s. ("EP Group") for the entire issued share capital of IDS not already owned by EP Group and its affiliates, namely VESA Equity Investment S.à r.l. ("Vesa Equity") (the "Proposal"). As of 14 May 2024 (being the date prior to this announcement), Vesa Equity holds 264,138,365 ordinary shares in the capital of the Company, representing approximately 27.6% of IDS' issued share capital.

The total value of the Proposal (the "Total Value") represents:

370 pence per IDS share

comprised of:

·      cash consideration of 360 pence per IDS share;

·      the final dividend in respect of the Financial Year ended 31 March 2024, which is expected to be 2 pence per IDS share (the "2024 Final Dividend") and which is expected to be paid in September 2024; and

·      a special dividend of 8 pence per IDS share which would be conditional upon completion of the transaction (the "Special Dividend").

The Proposal values the entire issued share capital of IDS at approximately £3.5 billion, and the Total Value represents a premium of approximately:

·      72.7% to the IDS share price of 214.2 pence as at close of business on 16 April 2024, being the day immediately prior to the start of the offer period;

·      63.2% to the one-month volume-weighted average price as at close of business on 16 April 2024, being the day immediately prior to the start of the offer period; and

·      53.1% to the twelve-month volume-weighted average price as at close of business on 16 April 2024, being the day immediately prior to the start of the offer period.

The Proposal follows significant negotiation including a number of earlier proposals from EP Group (the first of which was made on 9 April 2024 at a price of 320 pence per share in cash). The Total Value represents an increase of 15.6% on EP Group's original proposal.

Both Royal Mail and GLS perform critical functions in the markets where they operate, and the Board is particularly mindful of Royal Mail's unique heritage and responsibilities as the designated Universal Service Provider in the United Kingdom and a key part of national infrastructure. In assessing the Proposal, the Board has also been very mindful of the impact on Royal Mail and GLS and their respective stakeholders and employees, as well as broader public interest factors.

The Board has sought, and EP Group has agreed to offer as part of the Proposal, a set of contractual undertakings to protect key public interest factors and recognise Royal Mail's status as a key part of national infrastructure. It is anticipated that the commitment to offer these contractual undertakings to the UK Government (or, where applicable, to the Company and/or other stakeholders directly) would be reflected in the cooperation agreement between the parties if a firm offer is made. 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, and Royal Mail should remain headquartered and tax resident in the United Kingdom.

The Board will continue to engage with EP Group to seek to reach agreement on the exact scope and duration of such undertakings and contractual commitments which would be made to the UK Government (or, where applicable, to the Company and/or other stakeholders directly). In addition, the Board is seeking assurances from EP Group to maintain an investment grade rating profile of IDS.

While these and other aspects of Royal Mail's status as a key part of national infrastructure are ultimately the Government's responsibility to protect, the Board feels a duty to raise these issues and seek to protect the public interest as well as the interests of employees before recommending a bid that would take IDS into private ownership.

Having considered the Proposal, the Board has indicated to EP Group that it would be minded to recommend an offer to IDS shareholders should an offer be made at the level of the Total Value, subject to satisfactory resolution of the final terms and arrangements. EP Group has confirmed that the Proposal is not subject to any financing pre-condition.

Accordingly, the Board will continue to engage in discussions with EP Group to explore the Proposal in further detail and allow for each party to complete a limited period of confirmatory due diligence on the other.

Keith Williams, Chairman of IDS plc, commented: "The Board is minded to recommend this offer price, which it considers to be fair and reflects the value of GLS' current growth plans and the progress being made on change at Royal Mail to adapt the business to a significant fall in the demand for letters and growth in parcels.

"It is however regrettable that despite four years of asking, the Government has not seen fit to engage in reform of the Universal Service and thus improve our financial position and ensure that Royal Mail could provide an economically sustainable service to the British public.

"The Board believes that the proposed contractual undertakings to be offered by EP Group should ensure that IDS continues to deliver the key elements of the Universal Service in the UK and protect the interests of the workforce at both Royal Mail and GLS."

There can be no certainty that any offer will be made.  

EP Group has entered into a confidentiality agreement with IDS pursuant to which EP Group and Vesa Equity have agreed (among other things) to be subject to customary standstill restrictions during the course of the offer period (subject to customary exceptions).

Accordingly, with the consent of the Panel on Takeovers and Mergers (the "Takeover Panel"), the Board has agreed to an extension of the relevant 'put up or shut up' deadline under Rule 2.6(c) of the Code until 5.00 p.m. (London time) on 29 May 2024. This deadline may be further extended, with the consent of the Takeover Panel, at IDS' request, in accordance with Rule 2.6(a) of the Code.

No statement in this announcement constitutes a post-offer undertaking under Rule 19.5 of the Code.

A further announcement will be made as appropriate.

Notes:

In accordance with Rule 2.5 of the Code, EP Group reserves the right to:

·      make an offer for IDS on less favourable terms than the Proposal: (i) with the agreement or recommendation of the Board; (ii) if a third party announces a firm intention to make an offer for IDS which, at that date, is of a value less than the value of the Proposal; or (iii) following the announcement by IDS of a Rule 9 waiver transaction pursuant to Appendix 1 of the Code or a reverse takeover (as defined in the Code);

·      vary the form or mix of the consideration described in this announcement; and

·      announce an offer on less favourable terms than the Proposal if IDS announces, declares, makes or pays any dividend and/or other return of capital or distribution to its shareholders (other than the 2024 Final Dividend of 2 pence per IDS share and the Special Dividend of 8 pence per IDS share) after the date of this announcement (in which case EP Group reserves the right to reduce the offer by an amount up to the amount of such dividend and/or other return of capital or distribution).

This announcement has been made by IDS with the agreement of EP Group.

Enquiries

IDS plc                                                                                                

Investor Relations

John Crosse

[email protected]

Media Relations

Jenny Hall

Phone: +44 7776 993 036

Email: [email protected]

Greg Sage

Phone: +44 7483 421 374

Email: [email protected]

Royal Mail press office: [email protected]  

Barclays Bank PLC, acting through its Investment Bank (Financial adviser and corporate broker to IDS)                                                                                                         +44 20 7623 2323

Alisdair Gayne, Nicola Tennent, Aamir Khan, Philipp Gillmann

BofA Securities (Financial adviser and corporate broker to IDS)                       +44 20 7628 1000

Ed Peel, James Robertson, Justin Anstee, Jack Williams

Goldman Sachs International (Financial adviser to IDS)                                   +44 20 7774 1000

Eduard van Wyk, Mark Sorrell, Owain Evans

Important Notices

This announcement contains inside information and is issued on behalf of IDS by Mark Amsden, Group General Counsel and Company Secretary.

This announcement is not intended to, and does not constitute or form part of, any offer to sell or issue or any solicitation of an offer to purchase, subscribe for, or otherwise acquire, any securities or a solicitation of any vote or approval in any jurisdiction, whether pursuant to this announcement or otherwise.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for IDS and no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than IDS for providing the protections afforded to clients of Barclays nor for providing advice in relation to the subject matter of this announcement. In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the Exchange Act, Barclays and its affiliates will continue to act as exempt principal trader in IDS securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

Merrill Lynch International ("BofA Securities"), which is authorised by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority, is acting exclusively for IDS and for no one else in connection with the Proposal and will not be responsible to anyone other than IDS for providing the protections afforded to its clients or for providing advice in relation to the matters referred to in this announcement.

Goldman Sachs International, ("Goldman Sachs") which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for IDS and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than IDS for providing the protections afforded to clients of Goldman Sachs International, or for providing advice in relation to the matters referred to in this announcement.

Slaughter and May is advising IDS in connection with the Proposal. 

Forward-looking statements

This announcement contains certain forward-looking statements concerning the Company's business, financial condition, results of operations and certain plans, objectives, assumptions, projections, expectations or beliefs with respect to these items.

Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would', 'should', 'expects', 'believes', 'intends', 'plans', 'potential', 'targets', 'goal', 'forecasts' or 'estimates' or similar expressions or negatives thereof.

Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the Company's actual financial condition, performance and results to differ materially from the plans, goals, objectives and expectations set out in the forward-looking statements included in this announcement.

All written or verbal forward-looking statements, made in this announcement or made subsequently, which are attributable to the Company or any persons acting on its behalf are expressly qualified in their entirety by the factors referred to above. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. No assurance can be given that the forward-looking statements in this document will be realised; actual events or results may differ materially as a result of risks and uncertainties facing the Company. Subject to compliance with applicable law and regulation, the Company does not intend to update the forward-looking statements in this document to reflect events or circumstances after the date of this document, and does not undertake any obligation to do so.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Website publication

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on IDS' website (www.internationaldistributionsservices.com) by no later than 12 noon (London time) on the business day following the date of this announcement. The contents of the website referred to in this announcement are not incorporated into and do not form part of this announcement.