InPost S.A. (INPST) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for making time for us on such short notice. Before getting into the details, let me first introduce who are the presenters on the call today. Hein Pretorius, Chairman of the Supervisory Board of InPost; Javier van Engelen, our CFO; and Michael Rouse, our CEO, International. You will notice the absence of the group CEO in this call. That is a deliberate decision, and Hein will explain why before commenting on the announcement and taking your questions. As we are a listed company, we strictly follow the disclosure guidelines and can only answer questions within those guidelines. Thank you.

Thank you, Gaby, and thank you all for joining. Today marks an important milestone in the history of InPost. I will touch upon the highlights of the announcement we made this morning first. And as Gaby said, we will then take your questions. As you have read in the press release, Rafal Brzoska is part of the consortium. This means that he can't participate in any communications relating to the transaction as he was not involved in the assessment of the offer on behalf of the company. This has been a deliberate decision by the Board of Directors of InPost to ensure a strict governance and a clear separation between the company and the consortium. To that end, a special committee was formed of nonconflicted members of the Supervisory and Management Boards, including myself, further referred to as the Boards, which considered all aspects of the offer we received. The special committee ensured that the interest of the company and all of its stakeholders were taken into account in the decision-making. Rafal did not participate in any of these discussions. That explains why you are hearing from me today as a new face to walk you through the key highlights. Turning to the highlights of the transaction. As you have seen in the press release, InPost, Advent, FedEx, A&R, an investment vehicle founded by Rafal, and PPF have announced an agreement on recommended all-cash offer for all issued and outstanding shares of InPost at an offer price of EUR 15.60 per share. After the transaction, Advent will have a 37% interest in the consortium; FedEx, 37%; A&R, 16%; and PPF, 10%. PPF will sell the entirety of its stake in support of the transaction, but will remain committed to InPost through the reinvestment of a minority part of proceeds to become a 10% shareholder in the consortium. Following a thorough and diligent process, including external advice, InPost Boards consider this offer to be in the best interest of all stakeholders and unanimously support the transaction and recommend the offer. For shareholders, the offer price of EUR 15.60 values 100% of the shares at EUR 7.8 billion, providing immediate and certain value with an attractive offer premium. From a strategic perspective, the consortium will help drive InPost's growth potential as a leading European e-commerce solutions enabler by supporting its existing accelerated growth strategy, including further expansion of its parcel locker network in its existing markets and growth in consumer-centric and B2C digital solutions. The consortium brings together a proven and visionary founder and long-term experienced financial and strategic investors in the sector, with FedEx adding deep industry expertise based on its diversified and global network and advanced technology. After completion of the transaction, InPost and FedEx intend to enter into commercialization agreements to benefit from complementary strengths and a shared vision. But to be clear, FedEx and InPost will not integrate their operations and will remain independent competitors in their respective markets and segments. In that respect, I want to stress that InPost will continue to operate under the InPost brand with its head office in Poland and with its current management structure led by its CEO, Rafal. The transaction is supported by shareholders representing 48% of the outstanding shares in the company. The transaction offers a high degree of certainty and is subject to customary closing conditions. Let's move to the next slide. As for the financial considerations, all shareholders will receive a cash consideration of EUR 15.60 per share that is validly tendered. We believe the offer price clearly represents an attractive premium of 50% to the undisturbed share price on 2 January 2026, and 53% to the 3-month volume-weighted average price prior to 2 January. Let's now take a look at the consortium composition. The consortium brings together experienced financial and strategic partners who know our company very well. Advent has been part of InPost's journey since 2017. PPF is InPost's largest shareholder and although it will sell the majority of its stake, will remain invested. The continued investment of A&R signals Rafal's full commitment to the company and its strategic direction. FedEx adds deep industry expertise based on its diversified global network and advanced technology. Now Michael will walk you through the strategic rationale.

Thank you, Hein. Good morning. The strategic rationale for this transaction is clear. It supports the further expansion of InPost's European footprint and its parcel locker network across key markets as a leading e-commerce solutions enabler. At the same time, it strengthens our ongoing initiatives to redefine the European e-commerce sector and to grow our consumer-centric and B2C digital solutions. Together, this will unlock growth, increase consumer choice and drive value creation in Europe's fastest-growing delivery sector. FedEx brings deep industry expertise through its diversified global network and advanced technology. This creates a clear path to significantly expand InPost's out-of-home network, including the deployment of automated parcel machines, rapid and flexible doorstop delivery and PUDO locations. Finally, the partnership will connect FedEx global network of 3 million businesses and 225 million recipients worldwide with InPost locker network and B2C last mile operations. And just to be clear, as already mentioned by Hein, FedEx and InPost will not integrate their operations and will remain independent competitors in their respective markets and segments. And now moving on to the next slide. We believe this transaction is in the best interest of all stakeholders, and we have agreed to certain nonfinancial covenants. In addition to the strategic benefits already mentioned, let me highlight a few other important aspects. Our corporate identity, culture and values will remain unchanged, and our head office will continue to be based in Poland. Existing employee rights and benefits will be respected as will InPost current employee consultation structure. Furthermore, we do not anticipate any workforce changes as a direct result of the transaction. Our customers will remain at the center of our focus as we continue to deliver the high quality of service they know from us. The consortium will ensure that the company remains prudently financed. I will now hand back to Hein to cover the transaction assessment.

Thank you, Michael. As I already mentioned, a special committee was formed of nonconflicted members of the Supervisory and Management Boards to consider all aspects of the offer we received. The committee ensured that the interest of the company and all stakeholders were fully taken into account in the decision-making process. The process involved constructive discussions with the consortium, which led to improvements to the offer and today's announcement. Throughout this period, the Boards, supported by external advisers, carefully reviewed the proposal with a strong focus on stakeholder interest. Following this thorough review, both the Management Board and the Supervisory Board concluded that the offer is in the best interest of all stakeholders. They unanimously support the transaction and recommend the offer. Let's move on to the next slide. Commencement and consummation of the offer are subject to customary pre-offer and offer conditions. Let me briefly highlight the most important ones. These include that no material adverse effects has occurred, that the offer memorandum has been approved, that no competing or mandatory offer has been made, that antitrust approval and any other regulatory approvals are obtained, and that a minimum acceptance level of at least 80% of the shares is reached. Let me now give the floor to Javier to talk about the transaction elements and timetable.

Thank you, Hein. Thank you, Michael, and good morning, everyone. Regarding the transaction elements, I would like to highlight two. The consortium will fund the transaction through a combination of equity funding and debt financing. Also, a robust set of nonfinancial covenants have been agreed in the interest of all stakeholders. As for the next steps in the process, we envisage the following time line that starts with today's announcement. Towards the end of Q1, the consortium will file the draft offer memorandum for review with the AFM. Simultaneously, the consortium will also make the required antitrust and other regulatory filings. Once approval is received, the offer memorandum is expected to be published towards the end of Q2, marking the start of the tender period. During this time, we will hold an EGM to engage with our shareholders. We expect settlement and closing of the transaction in the second half of this year. We will keep all stakeholders, including yourselves, regularly informed throughout this process. And with that, we will now open the floor for any questions you may have.

[Operator Instructions] Our first question is from Michal Potyra from UBS.

I'm really sorry, I'm starting with a tricky one. But I have a question to the Board. It's exactly 5 years since the IPO and the IPO price was EUR 16. So I'm wondering if you believe that was a fair price back then, I'm wondering how are you -- what kind of arguments are you using to justify this price 5 years later when the company is way larger?

Thank you, Michal. Look, we followed a thorough diligent process, including external advice. InPost Boards considered the offer to be in the best interest of all stakeholders. And obviously, we unanimously support the transaction. We believe it provides immediate and certain value for InPost's shareholders with an attractive offer premium, which you've seen in the slides, it's about 50%. And we also believe it supports InPost's long-term strategy in the interest of all our stakeholders. The consortium will help drive InPost's growth potential by supporting its existing growth strategy, including further expansion of its European footprint in France, Spain, Portugal, Italy and the U.K. And InPost will continue to operate under the InPost brand with its head office in Poland. We've also obtained 2 fairness opinions. So we absolutely believe that this is the best offer for our shareholders.

And maybe -- I know it's not directly related to this transaction, but I guess it's very important for the share price. Do you have anything to report considering your ongoing contract with Allegro, please?

We continue to be in discussions. And obviously, we can't disclose any confidential discussions that we have with Allegro or any of our customers.

[Operator Instructions] There are currently no further questions over the phone. Apologies, we have a question from Henk Slotboom from the IDEA!

On the relationship with FedEx, perhaps. On the one hand, you say the companies remain independent and remain each other's competitors. Yet if I look at Slide 6 of the presentation, then the last bullet point shows that there may be more than just a passive shareholdership of FedEx. Perhaps you could elaborate on that?

Yes, Henk. Let me comment on that. I think what we have highlighted, which is also commented in the press release, post the closure of the transaction, it is our intent to go into a series of commercialization agreements with FedEx. Those agreements will form the backbone of a few different components. First, the ability for FedEx to use InPost's last mile network across Europe and the markets we operate in today. And two, the reversibility for InPost customers in Europe to use the vast global network of about 3 million businesses and 225 million consumers in terms of accessing that, especially as we look at the development of cross-border outside of Europe. Clearly, that means we're really going to market and operating as 2 separate companies, but where we can see components that collaborate, we will look to explore that.

It appears, there are currently no further questions over the phone. With this, I'd like to hand the call over to Harry for any webcast questions. Over to you, Harry.

Yes, we've got quite a few questions on the webcast. The first being from Dylan Simmonds at Serone. Will the existing bond be refinanced or remain outstanding as part of the transaction?

I'll take that question. The key thing in this transaction is that we've kept the optionality. It's our current assessment that indeed, the change of control clause that is built in both in our regular financing and in the bond, is not automatically triggered, but that will be a discussion that we will have in the coming months, both with the consortium and with the lending banks. But for us, it was important to keep the optionality open here.

The next question comes from Marnix Guillot at UBS. Can you please clarify whether you intend to call outstanding InPost 4% unsecured notes due 2031? If you do intend to call or refinance the bond, can you please clarify how you intend to do so? My understanding is that the current transaction structure would not trigger a change of control language in the bond.

So that's exactly what I just mentioned, right? So it's going to be the same thing. So we will basically have a look at what the contracts tell us, and we keep maximum optionality to basically get the best financing for the company going forward. So more news to come on that, but that's going to be later in the process. But again, we have the optionality in our assessment.

The next one comes from Josh Rosen at UFP. Could you kindly provide more details on which antitrust and regulatory clearances will be required?

Yes, we have to do a couple of filings. Obviously, we have merger control and FDI filings that have to be done. And they will be in the EU, the U.K., China, Israel, Turkey, Ukraine, Switzerland and in Vietnam. The most important of these filings would be within the EU.

The next question comes from [ Martin ]. Why is the transaction to be completed in H2 only? Do you see any antimonopoly issues in the countries InPost is now present?

In terms of H2, obviously, we have to go through the AFM now in terms of getting the merger protocol approved. Once that's approved, we go into an offer period. And only once the offer period is complete do we get into the completion cycle. So that takes some time, and there's a process to be followed within that. So that's why we foresee it only being closed in the second half of the year. With regards to the antimonopoly issues, from an InPost perspective, we don't see any issues, but this would be obviously driven by the consortium. So maybe a question for them.

The next question comes from David Kerstens at Jefferies. How does the takeover offer compare to recent transactions in the industry, notably the takeover of Evri last year for circa 10x EBITDA for a to-door parcel delivery company by Apollo?

If we compare that, we are bang on a 10.1x in terms of EBITDA multiple, so it's quite comparable.

The next question comes from [ Darius Sawatco ]. Did you concern offer price versus IPO price since the IPO company has grown significantly? And do you believe that fair value is significantly below IPO price, is that right?

Look, I mean, following, again, a diligent process, including with our external advisers and obtaining 2 fairness opinions, we consider the offer to be in the best interest of all stakeholders. And again, we unanimously support this transaction. It provides immediate and certain value for our shareholders and it supports our long-term strategy from an InPost perspective. We continue to look at this from all aspects. And it's everything in terms of the circumstances that we've looked at today, which is we think is fair value, and thereby, we are recommending this offer.

The next question comes from Monika Zdunska of IPOPEMA TFI. Could you please explain a post-closing demerger in details and give us an example of such a transaction in the past?

I'll take that one. Monika, look, it's -- I'm not going to go through the details because it's very technical. But if you take a step back, there will be a demerger process, and that's in the case that the tendered shares are between 80% and 95%. There will be demerger where all the assets of InPost will be transferred to a new entity, which will subsequently be transferred to the consortium. As a result of that later on, the minority shareholders that remain will receive a liquidation distribution which is equal to the offer price. It's also as described in the press release. Now to the second part of the question, yes, it's a standard way of looking at the transaction like these. We've checked both in Holland and in Luxembourg that these back-end structure demerger have been implemented. And therefore, that's also an option that we keep.

The next question comes from Rasmus Kantsø at Morgan Stanley. What is the expected leverage post the transaction?

The -- when we look at the financing of the transaction, again, one of the nonfinancial covenants is that basically, the consortium will be prudent in the way the company is capitalized, with a EUR 5.9 billion injection of equity and then up to EUR 4.9 billion or EUR 5 billion in debt financing. If you project that forward towards the end of the year roughly, then you will come to a leverage ratio which is slightly above 4, at least that's our estimation today, which is, I would say, for similar transactions and take private, is still well below or at least in line or below what we have seen in similar transactions. And by the way, it's significantly lower than how the company was capitalized in the first IPO -- in the first [ take-private ].

The next question comes from [ Jin Yu ]. Given the strategic benefits that the new shareholders can bring, i.e., improved operations longer term, why is the offer price still below sell-side's average target price of EUR 16 per share?

I'll take that one again. As we've mentioned before, we've gone through a diligent process. We have taken external advice. We have 2 fairness opinions from external advisers on this. And in the circumstances where we are today, we have an offer premium of above 50%, and we believe it's in the best interest of our shareholders to take this offer that's on the table. It provides immediate and certain value for them. And from an InPost's perspective, it supports our strategy in terms of accelerating our growth in the markets that we are currently present. So we believe this is the best offer that we can get on the table in the circumstances of where we're trading today.

The next question comes from Tom Beckmann at Jefferies. Are there an agreement at the consortium level where FedEx can take control of the consortium in the future, such as put/call arrangements or preemptive buying rights?

Unfortunately, that would be a question that you'd have to get from the consortium. That's not one that we as a company could answer.

The next one comes from Jakub Plotka Santander. Is the potential demerger upon reaching 80% of the votes as mentioned in the announcement in the interest of the company InPost within the meaning of the Dutch Civil Code?

I will get back to that one. Again, as we mentioned before and has said that we've taken extensive external advice on all the aspects of the transaction in line with our fiduciary duties that takes into account -- our Dutch listing takes into account that we are also a Luxembourg company. We think we have taken all those acts into account. And so the demerger or the potential demerger, if we don't get to the 95% threshold, is basically clear from all those angles and also then in line with the Dutch Civil Code.

Perfect. The next one comes from Florence Tournier at Churchill Capital. Dutch tender offers are usually subject to a 90% acceptance condition waivable to 80% following an EGM vote. Why isn't that the case here? Why is the EGM vote on post-closing merger taking place post settlement?

I would have to revert to the details to the lawyers, but still, as I mentioned before, we've looked at this from the Dutch and from a Luxembourg angle. Of course, we're incorporating Luxembourg. We've looked at similar transactions, both in Holland and in Luxembourg. And so the thresholds that we have mentioned in the announcement part are the ones that we are aware of. There will -- as you mentioned, there will be an extraordinary general meeting later in the process at the time of closure to get the vote on that demerger, if it happens there. But again, as people tender their shares, it will also include a proxy to vote in favor of that demerger.

Perfect. The next one comes from David Abraham at TD Securities. Could you please provide a list of the merger control and regulatory clearances, such as FDI or FSR that will be required?

I don't have this immediately to hand, but we would be able to provide that in more detail after this call.

Perfect. The next one comes from Alexia Dogani at JPMorgan. Will InPost utilize the FedEx network in other non-InPost countries to enter the market?

I'll take that one. I think, to emphasize, our focus will continue to be in the markets we operate today. As I've stated earlier, I think when Henk asked the question, we see the complementary assets that we both can play, and especially when you look at the global reach that FedEx have. But really, we see the opportunity to use FedEx's network for the benefit of our merchants in our existing countries. And, therefore, be able to sell internationally in that basis, and vice versa with FedEx being able to sell into the European markets, specifically around e-commerce and last mile. Clearly, that will provide significant growth opportunities for both companies. And together, we see a path to unlocking that growth, enhancing the B2C operations and also servicing and boosting returns and provide a better service for customers right across Europe.

The next question comes from [ Lukasz Jakubowski ] at PZU. Number one, what is the ultimate goal/intent of FedEx investment according to your best knowledge? Have you discussed with them a possibility of taking over full -- 100% of shares of InPost/or operating company after one stage of the transaction?

I think as Hein mentioned earlier, and again, I'll take this one. I think the intent of FedEx really here is part of the consortium. And therefore, it's important to stress that clearly, our focus here from us as a company is to remain independent, and that is something we've clearly been part of the discussion, and InPost will continue to operate stand-alone on that basis. I will also emphasize that clearly, this is an arm's length agreement we're getting into from a commercial point of view. And therefore, we will remain competitors, to some extent, in these segments and markets that we operate within today. So therefore, this is not seen as a takeover, as you highlighted, more -- we're really -- there's FedEx investing as part of the consortium; and two, the opportunity post closing for us to develop a commercial agreement, but very much InPost remaining stand-alone.

The next question comes from Marcin Nowak, IPOPEMA Securities. Regarding the post-closing demerger, in case of it happening, is there determined a pricing mechanism for selling stake in the company's splitco? And then the second part of the question is, is the 80% minimum acceptance threshold set, i.e., if the acquired number of shares is below 80%, does consortium plan to back out of the deal?

Yes. Look, there's a couple of questions also following. I'm going to try to bundle those that we don't have a repetition all the time. Let me start from the one that comes later on from [ Carol ], which suggests that we are circumventing statutory thresholds for squeeze-out. So let me immediately tackle that head on. We are not circumventing anything. We have again taken the right advice, looking at both markets on what are standard structures which are in place, which have been implemented in other occasions. And so again, we have different threshold. When you get to 95%, it's a normal squeeze-out; when it's above 80%, it's a demerger process. So again, we are not circumventing anything here. And so no, we don't expect at this point in time, but also not any kind of liabilities or any kind of minority shareholders. The price at which -- back to the first question, the price at which basically the demerger happened between the companies and the splitco is the offer price, so that is basically settled at that point in time. And again, once we get above 80%. And then basically, there was another question on any tax consequences. So far from all the things we've looked at, there is no significant tax consequences There's, of course, a couple of transactions that happened in the background, but they're minimal in terms of tax impact. And an important question was also earlier today that all of that tax modeling can be done as a standard practice, and InPost will remain significant and most important taxpayer in Poland throughout all of this.

And the next question comes from [ Nicolas ] at Square Global Markets. And you just said that the price in the post-merger restructuring will be equal to the offer. Can you develop on that and explain the absence on tax impact/liabilities of the demerger for minority stakeholders as it is usually the case?

That's what I've just done. So...

In which case, we'll move to a question from Lukasz Wachelko from Wood. He wants to understand, the stake of Mr. Brzoska post the transaction will increase to 16% from 12.5% currently. Do we get it right that Mr. Brzoska will inject fresh cash into the company?

I can quickly talk about that. No, there will be no fresh cash. What you basically see the rollover of Rafal's stake in InPost today. Now because of the different debt structure and the way the consortium is structured, that rollover translates mathematically from a 12.5% into a 16% in the new consortium. So there is no incremental cash, but Rafal will basically roll over his total stake and interest in InPost also coming in the consortium. So it's a mathematical translation from his current 12.5% to the 16% in the new setting and his commitment to basically be the key driver, still, of this business.

Perfect. There's currently no further questions, so I'll hand back for any closing remarks.

Again, I just -- thank you very much for all the questions. I hope we could answer all of them for you. I just want to reiterate that from our perspective, the Board believes that we've gone through a thorough and diligent process. We've taken on external advice. And from an InPost perspective, strategically, this deal makes a lot of sense. It will help InPost in terms of accelerating its growth in all of its current markets. And InPost will continue to operate under an InPost brand with its head office in Poland, and remain very strong from that perspective. So from a Board perspective, we recommend this offer, and we hope that all our shareholders can see the value that they can get that is on the table today.