M&A Activity • Nov 6, 2016
M&A Activity
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This announcement by bpost ("bpost") is being made pursuant to the provisions of Section 5, subsection 2 of the Netherlands Decree on Public Takeover Bids in connection with a potential voluntary offer by bpost for all the issued and outstanding ordinary shares in the capital of PostNL ("PostNL"). This announcement does not constitute or form part of an offer, or any solicitation of any offer, to buy or subscribe for any securities in bpost or any other securities or to sell any securities in PostNL. Any offer will be made only by means of an offer memorandum and on the terms and conditions set forth therein. This announcement is not for release, publication or distribution, in whole or in part, in or into, directly or indirectly, the United States, Australia, Canada or Japan.
Following the leak of 1 November and in accordance with regulatory requirements, bpost announces that it submitted today an improved and friendly proposal to the Boards of PostNL for the combination of both companies
Any offer by bpost for PostNL only to be made after agreement with PostNL and upon the recommendation of the PostNL Boards
• 0.1202 bpost shares per PostNL share,
representing a value of EUR 5.65 per PostNL share1
Brussels, 6 November 2016 - bpost announces that, following the leak of 1 November and its press release of 2 November, it has submitted today a renewed and improved proposal to the Boards of PostNL to combine PostNL and bpost through a public offer to be made by bpost for all issued and outstanding ordinary shares of PostNL.
The recent events have forced bpost to accelerate its decision making process regarding a possible approach to PostNL. In its meeting of 6 November the bpost Board unanimously approved a renewed and improved proposal by bpost to PostNL.
In its press release of 2 November, bpost indicated that it would communicate to the market as soon as it would be in a position to give more concrete guidance on a possible approach to PostNL. In view thereof, and in line with legal and regulatory requirements, bpost is obliged to inform the market of the key elements of its proposal.
bpost is fully convinced of the strategic merit of the combination of PostNL and bpost. In view of the consolidation trend in Europe, the strategic rationale of the combination may indeed be more powerful now than ever before. bpost's renewed proposal addresses the views and feedback given by PostNL during the negotiations between PostNL and bpost that ended in May 2016 and takes into account market and stakeholder responses to bpost's earlier approach.
bpost has invited the PostNL Boards to discuss its renewed and improved proposal and to negotiate a recommended transaction. bpost reiterates its intention to come to a mutually agreed transaction and will only proceed with any offer for PostNL after agreement with PostNL and upon the recommendation of the PostNL Boards.
"We have a unique opportunity to join forces and stand strong together. The combination of our companies enables us to become one of the leading players in Europe. Together we form a resilient platform to benefit from new challenges and market opportunities. We look forward to having an open and constructive dialogue with the Supervisory Board and the Management Board of PostNL." Compelling industrial and strategic rationale
The combination would create a leading mail, parcels and logistics solutions provider in Europe serving over 28 million potential customers in the Netherlands and Belgium. The combination would
1 Valued at bpost's closing price of EUR 23.50 on 4 November 2016
2 Last date before leak regarding possible new proposal by bpost to PostNL
provide a stronger, more resilient platform to address future market challenges and opportunities, especially in the area of parcels and logistics, where both companies can leverage their combined competencies to lead the development of innovative services.
The strong balance sheet of bpost would allow PostNL to substantially strengthen and accelerate its growth initiatives. The combination of PostNL´s and bpost´s complementary businesses would allow these companies to keep pace with their competitors in a sector where traditional boundaries are fading and new players are emerging.
Through the combination, PostNL and bpost can:
The proposed offer price would consist of EUR 2.825 in cash per PostNL share and 0.1202 bpost shares per PostNL share. This currently represents EUR 5.65 per PostNL share3 and is an attractive value proposition for PostNL's shareholders.
The offer price represents:
The cash component of the offer price would allow PostNL's shareholders to immediately monetise a significant part of the existing value of their PostNL shares. The share component of the offer price would entitle PostNL's shareholders to all bpost's dividends paid as of January 2017 and the future progressive dividend payments of the combination.3
bpost also proposes to offer PostNL's shareholders a mix and match facility that would allow them to elect, subject to off-setting elections, to vary the proportions in which they would receive cash and bpost shares for the PostNL shares tendered. The mix and match facility would not change the total number of bpost shares to be issued or the maximum amount of cash that would be paid by bpost.
3 The proposed offer price would be adjusted downwards for any dividend, capital repayment, other distribution or share buy-back made by PostNL prior to the closing of the transaction.
bpost intends to finance the cash component of the offer using existing cash resources and external debt, while keeping a robust balance sheet.
The combination would result in a major acceleration of PostNL's and bpost's growth strategy, which would drive significant expected earnings per share (EPS) and dividend per share (DPS) accretion, supported by a resilient balance sheet.
bpost is strongly committed to establish the combination as an attractive and socially responsible employer that would contribute to creating enhanced opportunities for the employment and development of the employees.
As the combination would provide a more resilient platform to invest in growth opportunities, it would generate new employment and job opportunities in the Netherlands and Belgium. These new jobs would play a key role in responding to increasing parcel volumes, but more importantly increasing convenience- and consumer-oriented solutions. The successful implementation of the joint strategy could lead in the medium term to the creation of around 3,200 full time jobs in the combined parcels and logistics business in the Netherlands and Belgium, which jobs would grosso modo be equally divided over the Netherlands and Belgium. The combination would not only create new employment opportunities, it would also aid the conservation of current jobs, including in the mail businesses through best practice sharing in mail solutions. Together, PostNL and bpost would be better equipped to combat declining mail volumes and the threat this poses to jobs in the mail industry.
The combination is driven by the joint growth strategy. PostNL's and bpost's businesses are strongly complementary, with limited overlap. The creation of the combination is therefore not expected to result in significant redundancies. bpost would respect the continuity of PostNL's existing employment conditions, social plans and pension arrangements.
bpost is committed to keeping an open and constructive dialogue and maintaining good relations with the relevant employee representative bodies and trade unions, based on mutual respect and recognition of shared interests. bpost looks forward to engaging with employee representative bodies and trade unions to share with them its views on the combination.
As a pillar of the envisaged joint strategy of the combination, the domestic mail operators in the Netherlands and Belgium would remain fully committed to affordable, accessible, reliable and innovative postal services. PostNL's strategic plan to remain the universal service provider that performs the universal service obligations in the Netherlands would be an important component of the joint strategy.
In order to safeguard the interests of current and former PostNL employees, as part of the offer, bpost would guarantee the performance of the PostNL's pension obligations towards the PostNL Pension Fund under the execution agreement. Should at any time PostNL be unable to meet its payment obligations under that agreement, bpost would stand ready to perform such obligations on the basis of its pension guarantee.
bpost is committed to establishing an innovation centre based in the Netherlands that would position the combination at the forefront of innovation and technology in the industry, whilst creating high quality employment in various fields of expertise. By investing in innovation, the combination would be able to deliver more services to the citizens of the Netherlands and Belgium, and create new opportunities in a market in the shaping. By innovating, the combination would be prepared and able to respond to tomorrow's customers' demands.
bpost views the combination as a merger of equals. The combination would require a balanced and workable governance framework to address the differences and strengths of PostNL and bpost within the combination.
As a result of the transaction, the Belgian State's shareholding in bpost would be diluted from 51% to approximately 40%, and bpost would become fully subject to private corporate law. This would be reflected in the governance of the combination.
The Board of Directors of the combination would consist of ten members, comprising:
The Executive Committee would be responsible for the overall coordination between the PostNL and bpost activities of the combination and the integration of those activities. PostNL and bpost would be equally represented in the Executive Committee.
The combination would hold on to the full large company regime for PostNL. The PostNL Supervisory Board would consist of five members: (a) three individuals to be nominated by bpost, (b) one current member of the PostNL Supervisory Board, who would be the chairman, and (c) one individual to be nominated upon the enhanced recommendation of the PostNL works council. The PostNL Board of Management would consist of two PostNL representatives.
bpost values the interests of all PostNL's stakeholders, including shareholders, employees, suppliers and customers. Therefore, bpost would ensure the observance of certain non-financial covenants relating to strategy, dividend policy, governance, integration, universal service obligation of PostNL, organization, financing, pension, and employees, in addition to the abovementioned arrangements.
The PostNL brand will continue to be applied as the brand of PostNL's Dutch operations. PostNL's Dutch headquarters and its key support functions would remain at its current location in The Hague, the Netherlands. The headquarters of the combination would be located in Brussels, Belgium.
bpost is ready to move swiftly and resume the well-advanced (as of May 2016) negotiations on the merger agreement with a view to coming to a recommended transaction within a short period of time.
As previously contractually agreed with PostNL, bpost will only proceed with the offer on the basis of such an agreement with PostNL and upon the recommendation of the PostNL Boards. In addition, the offer can only proceed after adoption of a Belgian royal decree authorizing the transaction so agreed.
The offer itself would be subject to customary pre-offer and offer conditions precedent for transactions of this nature, including, but not limited to, a minimum acceptance level, anti-trust clearance and such other regulatory clearances as may specifically be required in respect of the transaction.
bpost looks forward to engaging with PostNL on the renewed and improved proposal.
Baudouin de Hepcée (for journalists and investors): + 32 (0)476/49 69 58
Barbara Van Speybroeck (for journalists): + 32 (0)476/51 79 29
Saskia Dheedene (for investors): +32 2 276 76 43
This announcement contains inside information within the meaning of article 7(1) of the Regulation 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) and is being made on the basis of Article 17 of the Market Abuse Regulation, the Royal Decree of 14 November 2007 regarding the duties of issuers of financial instruments which have been admitted for trading on a regulated market (Koninklijk Besluit van 14 november 2007 betreffende de verplichtingen van emittenten van financiële instrumenten die zijn toegelaten tot de verhandeling op een gereglementeerde markt) (Belgium) and Section 4, subsection 3 of the Dutch Decree on Public Takeovers (the Netherlands).
This press release is not an offer to sell, or a solicitation of an offer to acquire, securities in any Member State of the European Economic Area and this press release is only being distributed to and is only directed at those persons who are qualified investors within the meaning of Article 2(1)(e) of Directive 2003/71/EC, as amended.
This press release does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or any other jurisdiction. Securities may not be offered or sold in the United States unless they have been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or are exempt from registration. The securities that may be offered in any transaction
have not been and will not be registered under the U.S. Securities Act and bpost does not intend to make a public offer of any such securities in the United States.
This press release is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The securities that may be offered in any transaction are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
The securities that may be offered in any transaction will not be registered under the applicable securities laws of Australia, Canada or Japan and the securities may not be offered or sold within Australia, Canada or Japan or to any national, resident or citizen of Canada, Australia, Japan or in any jurisdiction where it would be unlawful absent prior registration, filing or qualification under applicable laws. Neither this document nor any copy of it may be taken or transmitted into or distributed in Australia, Canada or Japan, or to any securities analyst or other person in any of those jurisdictions.
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