Whistl UK chief executive Nick Wells is spearheading a management buyout of the business from its Dutch parent PostNL, following a strategic review of its UK operations.
The move follows the company’s withdrawal from the so-called end-to-end delivery market after the collapse of a finance deal with Lloyds Bank’s private equity arm LDC.
At the time, Wells insisted the end-to-end operation remains a viable, profitable business but would need new investors. It seems that PostNL were not willing to wait, however.
Wells has been the boss of Royal Mail’s main rival virtually since PostNL (then TPG Post Group) bought his Circular Distributors company in 2001. Having started at CD as a junior account handler, Wells joined the board in the Eighties, aged 28, and went on to lead an MBO of that business, too.
In a statement, PostNL said: “This transaction will allow Whistl to develop its current profitable activities and strengthen its position in the UK. As part of the transaction PostNL will retain 17.5% of the shares in Whistl and will continue supporting the business as a shareholder.”
The deal is expected to be complete later this year and PostNL expects it will “negatively impact its equity” by between €20m and €25m. “The finalisation is subject to a number of conditions, including the financing of the management buy out,” the PostNL statement added.
Wells commented: “Through a management-led company, Whistl will continue to build upon its entrepreneurial heritage. We will continue to challenge, innovate and provide great service to customers, whilst retaining the support of PostNL.”
A Whistl spokesman said: “Following this transaction Whistl will be able to develop its current portfolio of activities and build its leading position in the UK postal market.
“Currently Whistl’s core DSA business has over 56% market share in the UK handling around 3.75bn items of mail, alongside an established Door Drop Media division. In addition there are growing Packets and Parcels and Logistics divisions.”
Whistl chiefs will also be keeping a close eye on regulator Ofcom’s investigation into Royal Mail’s alleged anti-competitive behaviour. Earlier this week, in a preliminary statement, Ofcom said Royal Mail had potentially broken UK competition law by trying to hike prices, even though plans were scrapped within a fortnight.
Ofcom is also in the middle of a “fundamental” review of Royal Mail, which followed Whistl’s decision to pull out of the end-to-end delivery market. That will investigate both the firm’s pricing and market dominance to ensure rivals are not being squeezed out.
Royal Mail flayed for price hike plan
Whistl axe triggers Ofcom probe
Whistl blows as losses hit £10.3m
Wells: Royal Mail put squeeze on us
Royal Mail joy as Whistl deal stalls
TNT Post UK unveils Whistl rebrand
Half of mail handled by private firms
Royal Mail demands TNT probe
Ofcom probes Royal Mail charges