Update Regarding Undertakings to UK Government

EP Corporate Group, a. s.

16 December 2024

 

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

FOR IMMEDIATE RELEASE

16 December 2024

RECOMMENDED CASH OFFER

for

International Distribution Services plc

by

EP UK Bidco Limited
(a newly formed company owned indirectly by (i) EP Group, a.s., formerly known as EP Corporate Group, a.s. ("EP") and (ii) J&T Capital Partners, a.s. ("J&T"))

Update Regarding Undertakings to the UK Government and Regulatory Conditions

On 29 May 2024, the boards of directors of each of EP UK Bidco Limited ("Bidco") and International Distribution Services plc ("IDS") announced that they had reached agreement on the terms of a recommended cash offer pursuant to which Bidco, a newly formed company owned indirectly by EP and J&T, would offer to acquire the entire issued and to be issued share capital of IDS, other than the IDS Shares owned or controlled by VESA Equity Investment S.à r.l. (the "Offer"). The offer document in relation to the Offer was published and made available to IDS Shareholders and to persons with information rights and participants in the IDS Share Plans on 26 June 2024 (the "Offer Document").

Terms used but not defined in this announcement have the same meaning given to them in the Offer Document.

Undertakings to the UK Government

EP and Bidco note that they had agreed with the IDS Board in the Cooperation Agreement to offer certain legally binding undertakings to the UK Government as soon as reasonably practicable following the announcement of the Offer on 29 May 2024 in relation to the Universal Service Obligation, the safeguarding and protection of Royal Mail, the control of Royal Mail and the GLS Group, the Royal Mail brand, the headquarters and tax residency of Royal Mail, the recognition of the CWU and CMA Unite, the Royal Mail Pension Plan, governance and transparency within the Royal Mail Group and the potential listing of a member of the Royal Mail Group (the "Proposed Commitments"). Such Proposed Commitments included EP and Bidco agreeing unilaterally to offer undertakings to the UK Government that, among other things, Royal Mail would continue as the UK's Universal Service Provider and that there would be no change in the control of GLS or Royal Mail for three years following completion of the Acquisition.

Having worked closely with the Secretary of State for the Department for Business and Trade (the "Secretary of State"), Bidco and EP are pleased to announce that they have entered into legally binding undertakings (the "Deed of Undertaking"), conditional upon completion of the Acquisition, in favour of the Secretary of State to reflect their commitment to safeguarding the important role that Royal Mail plays in the UK. Under the terms of the Deed of Undertaking, Bidco and EP have agreed to give the following legally binding undertakings (the "Agreed Undertakings").

Unless otherwise stated, the undertakings set out below shall continue to apply until Royal Mail is no longer directly or indirectly controlled by either EP, Daniel Křetínský, or any person controlled by, or under common control with Daniel Křetínský (a "Change of Control").

Protection of Royal Mail and its Universal Service Obligation

·      to ensure that Royal Mail continues as the Universal Service Provider for the purposes of the Postal Services Act 2011 (the "PSA") and secondary legislation and regulations in effect thereunder; and

·    to ensure that Royal Mail complies with the core regulatory conditions applicable to Royal Mail in its capacity as the Universal Service Provider imposed by Ofcom from time to time (including continuing to provide the "one-price-goes-anywhere" service in the United Kingdom and that first class letters are delivered six days a week).

As compared to the Proposed Commitments, this Agreed Undertaking is no longer limited to a five year period but continues until such time as there is a Change of Control, but is otherwise materially consistent with the Proposed Commitments.

Safeguarding Royal Mail

·      for the five year period commencing on and from completion of the Acquisition (the "Five Year Period"), subject to certain exceptions stated in the Agreed Undertakings, to ensure that Royal Mail does not make any distribution, return of capital, non-arm's length transfer of assets, upstream loan or repayment of the principal on any downstream loan (each a "Return of Value"); unless Royal Mail is in a robust, financially sustainable position, meaning that: (i) following any such Return of Value, Royal Mail would have a net leverage ratio of 2:1 or less (and the board of directors of Royal Mail determine that this shall continue to be the case for the 12 months thereafter); (ii) following any such Return of Value, it would reasonably be expected that there would be no material adverse effect on Royal Mail's ability to discharge its obligations as the Universal Service Provider under the PSA; and (iii) at the date of such proposed Return of Value, the Royal Mail Group's most recently reported quality of service scores for First Class Mail and Second Class Mail had equaled or exceeded the scores achieved for the period 1 April 2023 to 31 March 2024 (as announced by Royal Mail on 24 May 2024).  As compared to the Proposed Commitments, this Agreed Undertaking introduces an additional requirement that any Return of Value must also comply with the requirements in limb (iii) but is otherwise materially consistent with the Proposed Commitments;

·      to ensure that no member of the Royal Mail Group and no assets of the Royal Mail Group are subject to additional security, guarantees or third-party credit support in respect of any debt incurred by Bidco to finance the Acquisition. As compared to the Proposed Commitments, this Agreed Undertaking is no longer limited to a five year period but continues until such time as there is a Change of Control and there are no longer any carve-outs permitted to this Agreed Undertaking;

·      for the Five Year Period, to ensure that no member of the Royal Mail Group and no assets of the Royal Mail Group are subject to additional security, guarantees or third-party credit support in respect of any financing which refinances the IDS Bonds, unless such financing is in an amount that is equal to or less than the aggregate principal amount of the IDS Bonds being refinanced.  This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

·      for the Five Year Period, to ensure that no member of the Royal Mail Group and no assets of the Royal Mail Group are subject to additional security, guarantees or third-party credit support in respect of any other financing, the proceeds of which are not contributed to the Royal Mail Group unless Royal Mail is in a robust, financially sustainable position, meaning that: (i) following any such assumption of liability, Royal Mail would have a net leverage ratio of 2:1 or less (and the board of directors of Royal Mail determine that this shall continue to be the case for the 12 months thereafter); (ii) following any such assumption of liability, it would reasonably be expected that there would be no material adverse effect on Royal Mail's ability to discharge its obligations as the Universal Service Provider under the PSA; and (iii) at the date of such proposed assumption of liability, the Royal Mail Group's most recently reported quality of service scores for First Class Mail and Second Class Mail equaled or exceeded the scores achieved for period 1 April 2023 to 31 March 2024 (as announced by Royal Mail on 24 May 2024). This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

·      for the Five Year Period, if and to the extent any shares in GLS are transferred to a third party, subject to certain exceptions stated in the Agreed Undertakings, not to make any Return of Value outside of the IDS Group; unless Royal Mail is in a robust, financially sustainable position, meaning that: (i)  following any such Return of Value, Royal Mail would have a net leverage ratio of 2:1 or less (and the board of directors of Royal Mail determine that this shall continue to be the case for the 12 months thereafter); (ii) following any such Return of Value, it would reasonably be expected that there would be no material adverse effect on Royal Mail's ability to discharge its obligations as the Universal Service Provider under the PSA; and (iii) at the date of such proposed Return of Value, the Royal Mail Group's most recently reported quality of service scores for First Class Mail and Second Class Mail equaled or exceeded the scores achieved for period 1 April 2023 to 31 March 2024 (as announced by Royal Mail on 24 May 2024). As compared to the Proposed Commitments, this Agreed Undertaking introduces an additional requirement that any Return of Value must also comply with the requirements in limb (iii) but is otherwise materially consistent with the Proposed Commitments;

·      not to undertake any change to the corporate structure of Royal Mail or any other transaction concerning the assets of Royal Mail (including any asset disposal) which would, in the reasonable determination of the board of directors of Royal Mail, result in Royal Mail not being able to discharge its obligations as the Universal Service Provider and strive to achieve the associated quality of service targets. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

·      to restructure the Royal Mail Group's balance sheet by procuring that the intragroup interest-bearing loan of approximately £600 million between IDS Holdco Limited (as lender) and Royal Mail (as borrower) dated 1 August 2024, is capitalised as equity of Royal Mail within six months following completion of the Acquisition. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

·      for at least three years commencing on and from the completion of the Acquisition, subject to limited force majeure exceptions stated in the Agreed Undertakings, ensure that the Royal Mail Group has sufficient financial means to meet the planned capital expenditure required to implement its transformation agenda. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

·      for the Five Year Period, and for so long as Royal Mail is the Universal Service Provider, continue to participate in and contribute to the Universal Postal Union (the UN Specialised Agency for international postal cooperation, which sets the rules for international mail exchanges and makes recommendations to boost mail, parcel and financial services volumes, while improving service quality), including complying with the mandate described in the letter from the Department for Business and Trade to Royal Mail dated 20 February 2024 (as amended from time to time) (such compliance mandate includes bearing 50% of membership and interpretation costs) and participating in the UPU Postal Operations Council. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

·      for the Five Year Period, and for so long as Royal Mail is the Universal Service Provider, ensure that the Royal Mail Group consults with the UK Crown Dependencies and Overseas Territories where it provides postal and other services, on any proposed changes to the applicable terms of such services or which would otherwise affect their designated operators. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments; and

·      for the Five Year Period, maintain 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, including by modernising and electrifying its fleet and cutting emissions. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

Royal Mail and GLS Group

·      for at least three years commencing on and from the completion of the Acquisition, to ensure that there is no Change of Control of GLS or Royal Mail. This Agreed Undertaking is consistent with the equivalent commitment in the Proposed Commitments; and

·      without prejudice to the above, if a Change of Control of Royal Mail occurs during the Five Year Period, to ensure that the new ultimate corporate controller of the Royal Mail Group adheres to the terms of the Agreed Undertakings. This Agreed Undertaking is consistent with the equivalent commitment in the Proposed Commitments;

Pension surplus

·      for the Five Year Period, to ensure that Royal Mail does not transfer any amount of surplus refunded from its defined benefit pension arrangement known as the Royal Mail Pension Plan (the "RMPP") other than to the Royal Mail business, and in all cases subject to the agreement of the RMPP pension trustees. This Agreed Undertaking is consistent with the equivalent commitment in the Proposed Commitments;

Brand identity and commitment to the UK

·      for so long as a member of the Royal Mail Group is the Universal Service Provider, to maintain and protect the brand identity of Royal Mail by ensuring that: (i) Royal Mail retains as its legal name, Royal Mail Group Limited; (ii) the Royal Mail Group carries on business under the trading name "Royal Mail"; and (iii) the Royal Mail Group continues to use the Royal Cypher in accordance with existing arrangements and takes steps necessary to continue such use. As compared to the Proposed Commitments, this Agreed Undertaking is no longer limited to a five year period but continues until such time as there is a Change of Control and the obligation to continue to take steps necessary use the Royal Cypher in accordance with existing arrangements is now an absolute one which is not limited to using commercially reasonable endeavours to do so;

Headquarters and tax residency

·      for the Five Year Period, to ensure that IDS and Royal Mail maintain their headquarters in the UK. This Agreed Undertaking is consistent with the equivalent commitment in the Proposed Commitments; and

·      for the Five Year Period, to ensure that IDS and Royal Mail and each of their respective subsidiaries (but excluding GLS and its subsidiaries) which was UK tax resident as at 29 May 2024 remains tax resident in the UK. This Agreed Undertaking is consistent with the equivalent commitment in the Proposed Commitments;

HMG Share

·      to preserve the UK headquarters and UK tax residence of Royal Mail notwithstanding any potential future change in ownership of Royal Mail, by procuring, as soon as reasonably practicable and no later than three months following completion of the Acquisition, the allotment and issue by Royal Mail of a new non-transferable share of £1.00 (the "HMG Share") to the Secretary of State, which has no voting or economic rights, but has certain reserved matters attached to it that require the prior written consent of the holder of the HMG Share, including, subject to certain exceptions stated in the Agreed Undertakings: (i) any change to the location of the headquarters or centre of operations of Royal Mail or any of its subsidiaries that are involved in meeting the Royal Mail's obligations as the Universal Service Provider; (ii) any change to the corporate structure or business activities of such entities with the intention or contemplated consequence of changing the jurisdiction of tax residence of any such entities, in each case away from the UK; and (iii) any change to the articles of association or other constitutional documents of Royal Mail that would amend the terms of the HMG Share or the rights of the holder of the HMG Share; and

·      to procure, as soon as reasonably practicable and no later than three months following completion of the Acquisition, that the articles of association of Royal Mail are amended to include the rights of the HMG Share;

This Agreed Undertaking in respect of the HMG Share is a new undertaking that was not contained in the Proposed Commitments;

Listing

·      for the Five Year Period, in the event that any member of the Royal Mail Group or an intermediate holding company of Royal Mail were to be listed, to ensure that the primary listing takes place on the Main Market or the Alternative Investment Market of the London Stock Exchange. This Agreed Undertaking is consistent with the equivalent commitment in the Proposed Commitments;

Unions

·      for the Five Year Period, to ensure that Royal Mail (and each of its relevant subsidiaries which employs staff) continues to recognise the CWU and CMA Unite under the Trade Union and Labour Relations (Consolidation) Act 1992 (if applicable) or any similar legislation in any other jurisdiction and in accordance with the relevant agreements in place with such unions. This Agreed Undertaking is consistent with the equivalent commitment in the Proposed Commitments; and

·      negotiate in good faith with the CWU and CMA Unite and use all commercially reasonable endeavours to conclude agreements with each of them as soon as practicable after the date of the Agreed Undertakings and comply with such future legally binding agreements. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

Governance and transparency

·      within three months following completion of the Acquisition and for the duration of the Five Year Period, to ensure Royal Mail has a board comprising at least five directors, of whom: (i) at least two individuals shall be non-executive directors elected or proposed by Royal Mail, Bidco or the shareholder(s) of Royal Mail who would be treated as "independent" for the purposes of the UK Corporate Governance Code published by the Financial Reporting Council (as in force as at the date of the Agreed Undertakings); and (ii) at least two directors shall be UK or British nationals. As compared to the Proposed Commitments, this Agreed Undertaking introduces an additional requirement that at least two directors shall be UK or British nationals but is otherwise materially consistent with the Proposed Commitments;

·      use all commercially reasonable endeavours to encourage any buyer of a controlling stake in the Royal Mail Group to engage with the Secretary of State in relation to the continuation of a version of the Agreed Undertakings (including any additional undertakings proposed by the UK Government), and emphasise the importance of the UK Government's role in relation to the Royal Mail Group. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

·      notify the Secretary of State prior to signing any binding agreement for the sale of a controlling stake in the Royal Mail Group. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments;

·      to comply with all legally applicable information requirements that mandate the provision of relevant information to: (i) the UK Government; (ii) law enforcement; or (iii) the National Cyber Security Centre or National Protective Security Authority, in each case as is required to ensure the resilience of critical national infrastructure. This Agreed Undertaking is a new undertaking that was not contained in the Proposed Commitments; and

·      to ensure that Royal Mail complies with its financial reporting and accountability obligations under any regulatory conditions imposed by Ofcom from time to time under the PSA. As compared to the Proposed Commitments, this Agreed Undertaking is no longer limited to a five year period but continues until such time as there is a Change of Control.

None of the statements in this announcement, or any of the Agreed Undertakings referred to above, are "post-offer undertakings" for the purposes of Rule 19.5 of the Takeover Code.

The full text of the Secretary of State's announcement in respect of the Deed of Undertaking will be published as a press release on gov.uk shortly. A copy of the Deed of Undertaking can be found on IDS' website at www.internationaldistributionservices.com.

For the avoidance of doubt, the discussions which have taken place between EP, Bidco and the UK Government in relation to the Deed of Undertaking are independent from the review of the Acquisition being undertaken by the Chancellor of the Duchy of Lancaster pursuant to the National Security and Investment Act 2021 (the "NSI Act"), which forms the basis of the Condition set out in paragraph 2(f) of Part A of Part 3 (Conditions to and further terms of the Acquisition) of the Offer Document.

Regulatory Conditions

The Acquisition remains subject to satisfaction or, where applicable, waiver of the Conditions set out in the Offer Document published on 26 June 2024. Of the required antitrust and regulatory approvals, non-objections or expiry of applicable waiting periods set out in paragraphs 2(a) to 2(j) (inclusive) of Part A of Part 3 (Conditions to and further terms of the Acquisition) of the Offer Document (the "Regulatory Conditions"), those set out in paragraphs 2(e) (European Commission Merger Control), 2(f) (UK NSI Act), 2(g) (Foreign Direct Investment) and 2(j) (EU Foreign Subsidies Regulation) remain outstanding. Each of the other Regulatory Conditions have now been satisfied. EP and Bidco will continue to engage with the relevant authorities in relation to the outstanding Regulatory Conditions and will provide an update once all of the Regulatory Conditions have been satisfied or waived, as applicable. Subject to the satisfaction or waiver (as applicable) of the Conditions (including, the Regulatory Conditions), it is currently expected that the Offer will become or will be declared Unconditional in the first quarter of 2025.

 Enquiries:

BNP Paribas (Financial Adviser to EP, J&T and Bidco) George Holst Kirshlen Moodley Guilhem Donnard	[phone]
Citi (Financial Adviser to EP, J&T and Bidco) Barry Weir Ram Anand Christopher Wren	[phone]
J.P. Morgan Cazenove (Financial Adviser to EP, J&T and Bidco) Dwayne Lysaght Charles Oakes Siddharth Gupta	[phone]
FGS Global (PR Adviser to EP, J&T and Bidco)      Chris Ryall Alastair Elwen	[phone]

Further information

Kirkland & Ellis International LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as legal advisers to Bidco and EP.

BNP Paribas is authorised and regulated by the European Central Bank and the Autorité de Contrôle Prudentiel et de Résolution. BNP Paribas is authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of BNP Paribas' regulation by the Prudential Regulation Authority are available from BNP Paribas on request. BNP Paribas has its registered office at 16 Boulevard des Italiens, 75009 Paris, France and is registered with the Companies Registry of Paris under number 662 042 449 RCS and has ADEME identification number FR200182_03KLJ. BNP Paribas London Branch is registered in the UK under number FC13447 and UK establishment number BR000170, and its UK establishment office address is 10 Harewood Avenue, London NW1 6AA. BNP Paribas is acting as financial adviser exclusively for EP, J&T and Bidco and no one else in connection with the matters described in this announcement and will not be responsible to anyone other than EP, J&T or Bidco for providing the protections afforded to clients of BNP Paribas or for providing advice in relation to the matters described in this announcement or any transaction or arrangement referred to herein.

Citigroup Global Markets Europe AG, which is regulated by the European Central Bank and the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) and Bundesbank, ("Citi") is acting as financial adviser for EP, J&T and Bidco and for no one else in connection with the matters described in this announcement and the Acquisition and will not be responsible to anyone other than EP, J&T and Bidco for providing the protections afforded to clients of Citi nor for providing advice in connection with the Acquisition, or any other matters referred to in this announcement. Neither Citi nor any of its affiliates, directors or employees owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, consequential, whether in contract, in tort, in delict, under statute or otherwise) to any person who is not a client of Citi in connection with this announcement, any statement contained herein, the Acquisition or otherwise.

J.P. Morgan SE, together with its affiliate J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United Kingdom by the PRA and regulated in the United Kingdom by the PRA and the FCA (together, "J.P. Morgan"). J.P. Morgan is acting as financial adviser exclusively to EP, J&T and Bidco and no one else in connection with the Acquisition and will not regard any other person as its client in relation to the Acquisition and will not be responsible to anyone other than EP, J&T or Bidco for providing the protections afforded to clients of J.P. Morgan or its affiliates, nor for providing advice in relation to the Acquisition or any other matter or arrangement referred to herein.

Important notices

This announcement is for information purposes only and is not intended to, and does not, constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of IDS in any jurisdiction in contravention of applicable law. The Acquisition will be implemented solely pursuant to the terms of the Offer Document which contains the full terms and conditions of the Acquisition, including details of how to accept the Offer. Any decision or response in relation to the Acquisition should be made only on the basis of the information contained in the Offer Document.

The release, distribution or publication of this announcement in whole or in part, directly or indirectly in, into or from 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.

This announcement does not constitute a prospectus, prospectus equivalent document or exempted document.

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Overseas Shareholders

The release, publication or distribution of this announcement in, into or from jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the law of any jurisdiction other than the UK should inform themselves of, and observe, any applicable legal or regulatory requirements. Any failure to comply with such requirements may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This announcement has been prepared in accordance with and for the purpose of complying with English law, the Takeover Code, the Market Abuse Regulation and the Disclosure Guidance and Transparency Rules and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England.

The availability of the Acquisition to IDS Shareholders who are not resident in and citizens of the UK may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Persons who are not resident in the UK should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. Further details in relation to Overseas Shareholders are contained in the Offer Document.

Unless otherwise determined by Bidco or required by the Takeover Code, and permitted by applicable law and regulation, the Acquisition will not be made available, in whole or in part, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may accept the Offer by any such use, means, instrumentality or from within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Copies of this announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including, without limitation, agents, custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported acceptance of the Offer. Unless otherwise permitted by applicable law and regulation, the Offer may not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.

Further details in relation to Overseas Shareholders are included in the Offer Document and IDS Shareholders are advised to read carefully the Offer Document.

The Acquisition will be subject to English law, the applicable requirements of the Companies Act, the Takeover Code, the Panel, the FCA and the London Stock Exchange and applicable securities law.

Note to U.S. holders of IDS Shares

The Offer is being made for the securities of an English company that is listed on the London Stock Exchange by means of a contractual takeover offer under the Takeover Code and English law and is subject to disclosure requirements and practices that are different, in some cases materially, from the tender offer rules of the United States. The financial information included in the Offer Document has been prepared in accordance with accounting standards applicable in the United Kingdom and thus may not be comparable to financial information of U.S. companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

For U.S. holders of IDS Shares, the receipt of cash pursuant to the terms of the Acquisition as consideration for the transfer of their IDS Shares, may be treated as a taxable transaction for U.S. federal income tax purposes and under applicable U.S. state and local, as well as foreign and other, tax laws. The receipt of the 2024 Final Dividend and the Special Dividend may also give rise to taxable income. Each holder of IDS Shares is urged to consult with its own legal, tax and financial advisers in connection with making a decision regarding this transaction and as to the U.S. federal, and applicable U.S. state, local, and foreign, tax consequences to it of the transaction contemplated hereby in light of such holders' specific circumstances.

For purposes of the U.S. Exchange Act, it is intended that the Offer be made pursuant to Section 14(e) and Regulation 14E under the U.S. Exchange Act and benefit from exemptions available to "Tier I" cross-border tender offers. Accordingly, the Offer will be subject to disclosure and other procedural requirements under the applicable laws of the United Kingdom, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that may be materially different from those applicable under U.S. domestic tender offer procedures and law, and certain rules applicable to tender offers made into the United States, including rules promulgated under Section 14(d), Section 14(e)(1) and Section 14(e)(2) of the U.S. Exchange Act, do not apply.

Once the Offer is declared Unconditional, Bidco will acquire all IDS Shares that have by that time been validly tendered (or deemed to have been validly tendered) in acceptance of the Offer and will, in accordance with the Takeover Code, settle the relevant consideration for all such accepted IDS Shares (other than (A) in respect of the 2024 Final Dividend which was approved by IDS Shareholders and paid on 29 September 2024 and (B) in respect of participants in the IDS Share Plans, in respect of whom settlement will be effected through payroll or such other method as may be determined by IDS): (i) in the case of acceptances received, valid and complete in all respects, by the date on which the Offer becomes or is declared Unconditional, within 14 days of such date; or (ii) in the case of acceptances of the Offer received, valid and complete in all respects, after the date on which the Offer becomes or is declared Unconditional but while it remains open for acceptance, within 14 days of the date of such receipt, in each case, rather than the three trading days that U.S. investors may be accustomed to in U.S. domestic tender offers. Similarly, if the Offer is terminated or withdrawn, all documents of title will be returned to IDS Shareholders within 14 days of such termination or withdrawal. U.S. investors should closely read Part B of Part 6 (Additional Information) of the Offer Document for further details.

In accordance with normal UK practice and Rule 14e-5(b) under the U.S. Exchange Act, Bidco and its nominees or brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, IDS Shares outside the United States, other than pursuant to the Offer, before or during the period in which the Offer remains open for acceptance. Also, in accordance with Rule 14e-5(b) of the U.S. Exchange Act, BNP Paribas, Citigroup Global Markets Limited and J.P. Morgan will continue to act as exempt principal traders in IDS Shares on the London Stock Exchange. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the United Kingdom, will be reported to a Regulatory Information Service of the FCA and will be available on the London Stock Exchange website: www.londonstockexchange.com.

This announcement does not constitute or form part of a public offer of securities in the United States or an offer to the public in the United States to acquire or exchange securities. Except pursuant to an applicable exemption, each of the Offer Document and the Form of Acceptance do not constitute or form part of an offer of any securities to, or for the account or benefit of, any U.S. Person.

Bidco is a private limited company incorporated under English law. The Bidco Directors are citizens of the Czech Republic and all such persons are residents of countries other than the United States. As a result, it may be difficult for investors to effect service of process within the United States upon the Bidco Directors or otherwise compel Bidco, IDS or their respective directors, officers and affiliates to subject themselves to the jurisdiction and judgment of a U.S. court. It may not be possible to sue Bidco or IDS, or any of their respective directors, officers or affiliates, in a non-U.S. court for violations of U.S. securities laws. There is doubt as to the enforceability in the United Kingdom, in original actions or in actions for enforcement of judgments of the U.S. courts, of civil liabilities predicated upon U.S. federal securities laws.

Publication on website and availability of hard copies

This announcement will be available free of charge, subject to certain restrictions relating to persons resident or located in Restricted Jurisdictions, for inspection on IDS' website at www.internationaldistributionservices.com, by no later than 12.00 p.m. (London time) on the date following publication of this announcement and during the course of the Offer. For the avoidance of doubt, unless otherwise stated, neither the contents of IDS' website nor the contents of any website accessible from hyperlinks on IDS' website (or any other websites referred to in this announcement) are incorporated into, or form part of, this announcement.

Pursuant to Rule 30.3 of the Takeover Code, you may, subject to certain restrictions relating to persons resident or located in any Restricted Jurisdictions, request a hard copy of this announcement and all information incorporated into this announcement by contacting the Registrar at Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom, or on [phone] between 8.30 a.m. to 5.30 p.m. (London time) Monday to Friday (excluding public holidays in the United Kingdom). For deaf and speech impaired shareholders, calls can be made via Relay UK. Please see www.relayuk.bt.com for more information. Please note that Equiniti cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. In accordance with Rule 30.3 of the Takeover Code, a person so entitled may also request that all future documents, announcements and information in relation to the Acquisition should be sent to them in hard copy form. If you have received this announcement in electronic form or via a website notification, hard copies of this announcement and any document or information incorporated by reference into this announcement will not be provided unless such a request is made.

IDS Shareholders may also, subject to certain restrictions relating to persons resident or located in any Restricted Jurisdictions, request that all future documents, announcements and information sent to them in relation to the Acquisition be in hard copy form. A hard copy of such document (including this announcement), announcement or information will not be sent unless so requested.

Forward-looking statements

This announcement contains certain statements about Bidco and IDS that are or may be forward-looking statements, including with respect to the Acquisition. Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current assumptions, expectations, valuations, targets, estimates, forecasts and projections of Bidco and IDS about future events, and are therefore subject to risks and uncertainties which could cause actual results, performance or events to differ materially from those expressed or implied by the forward-looking statements. All statements other than statements of historical facts included in this announcement may be forward-looking statements. Without limitation, forward-looking statements often include words such as "targets", "plans", "believes", "hopes", "continues", "expects", "aims", "intends", "will", "may", "should", "would", "could", "anticipates", "estimates", "will look to", "budget", "strategy", "would look to", "scheduled", "goal", "prepares", "forecasts", "cost-saving", "is subject to", "synergy", "projects" or words or terms of similar substance or the negative thereof.

By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the possibility that the Acquisition will not be pursued or consummated, failure to obtain necessary regulatory approvals or to satisfy any of the other conditions to the Acquisition if it is pursued, adverse effects on the market price of Bidco's or IDS' ordinary shares and on Bidco's or IDS' operating results because of a failure to complete the Acquisition, failure to realise the expected benefits of the Acquisition, negative effects relating to the announcement of the Acquisition or any further announcements relating to the Acquisition or the consummation of the Acquisition on the market price of IDS Shares, significant transaction costs and/or unknown liabilities, the IDS Group incurring and/or experiencing unanticipated costs and/or delays (including IT system failures, cyber-crime, fraud and pension scheme liabilities), general economic and business conditions that affect the IDS Group following the consummation of the Acquisition, changes in global, political, economic, business, competitive, market and regulatory forces (including exposures to terrorist activities), future exchange and interest rates, changes in tax laws, regulations, rates and policies, future business combinations or disposals, changes in general economic and business conditions, changes in the behaviour of other market participants, weak, volatile or illiquid capital and/or credit markets, interest rate and currency value fluctuations, changes in laws or in supervisory expectations or requirements and competitive developments. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement. If any one or more of these risks or uncertainties materialises or if any one or more of the assumptions proves incorrect, actual results may differ materially from those expected, estimated or projected.

All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

Each forward-looking statement speaks only as of the date of this announcement. Neither Bidco nor IDS, nor any of their respective associates or directors, officers or advisers, provides any representation, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. Other than in accordance with their legal or regulatory obligations (including under the Takeover Code, the UK Listing Rules and the Disclosure Guidance and Transparency Rules), neither the Bidco Group nor the IDS Group is under, or undertakes, any obligation, and each of the foregoing expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover 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 Takeover 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 Panel's website at https://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 [phone] if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Information relating to IDS Shareholders

Please be aware that addresses, electronic addresses and certain other information provided by IDS Shareholders, persons with information rights and other relevant persons for the receipt of communications from IDS may be provided to Bidco during the offer period as required under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover Code.

 

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