Royal Mail owner International Distributions Services PLC (LSE:IDS) has struck a deal to buy a stake in Greece's largest parcel delivery company for €74 million (£62 million), which analysts said was a high price, especially as it continues to await major decisions about its future from the government and sector regulator.
The acquisition of a 20% stake is being made in ACS, which has been a network partner of IDS's international parcel subsidiary, GLS, since 2004, with a call option to acquire the remaining 80% within two years.
ACS delivers across all of mainland Greece and the Greek islands, with over 270 outlets served by eight distribution hubs, including a largely automated central Athens hub that was opened in 2022. In the 12 months to June 2024, ACS generated revenue of roughly €155 million and underlying earnings of around €29 million.
IDS chief executive Martin Seidenberg said the deal "represents a significant and rare opportunity to invest in a leading independent carrier in Europe, which fully supports GLS' strategy.
"We are committed to building on GLS' history of successful organic and inorganic growth in Europe and this investment will improve our service offering in the largest market within the EU which is not served by the GLS network today."
IDS continues to have some major unresolved questions circling overhead, including the proposed takeover by Daniel Křetínský’s EP Group, which some analysts expect will not gain approval from the new Labour government under the National Security and Investment (NSI) Act, plus regulator Ofcom's final decision about the company's universal service obligation (USO) requirements.
Analysts Alexander Paterson at Peel Hunt said as the acquisition price for the call option and the strike price have not been disclosed, assuming the cost of the call option is nominal, they estimate the purchase price for the initial 20% stake to be 12.8 times EBITDA.
"While this multiple is high, it reflects the relative scarcity of large, independent parcel operators in Europe," said Paterson.