Candover pays £349m for UK mail delivery

Candover, a London-based private equity firm, has offered 415 pence per share for business mail service DX Services, with plans to merge the company with business-to-consumer mail service Secure Mail Services.

Candover, a European buyout firm, has had a 415 pence per share offer for DX Services, a business mail delivery service, accepted by the company’s board and plans to merge it with business-to-consumer secure mail services company Secure Mail services.
At 3.15 GMT today, DX Services shares were trading at 414.75 pence, slightly below the offer price.
Candover’s offer, made through acquisition vehicle MAL, for DX Services values the business at £348.7 million (€502 million). The offer is 12.6 times DX Services’ EBITDA and 20.6 times its pre-exceptional earnings for 2005.
Candover will make the transaction from its Candover 2005 Fund, which raised €3.5 billion last November, and its listed investment trust Candover Investments.
The offer has received a unanimous recommendation by DX Services’ director and irrevocable undertakings from shareholders representing 28.1 percent of the company’s issued share capital.
If the offer for DX Services is successful, Candover said that it would also purchase Secure Mail Services for an undisclosed sum, with the intention of creating a potential alternative to Royal Mail, the dominant UK mail operator.

The enlarged group will have combined pro-forma turnover of £175 million, approximately 1,840 employees and will handle over 270 million items of mail per year.