Royal Mail’s parent company has acquired a minority stake in delivery network Collect+ for £43.9 million, leading to a rocketing share price for owner PayPoint.
PayPoint set up Collect+ as a joint venture with Yodel in 2009. It would buy Yodel’s stake for just £6m in 2020.
Now International Distribution Services (IDS), owner of Royal Mail, has agreed a £43.9m deal for a 49% stake in the business, valuing Collect+ at £90m. PayPoint owns the other 51% following the deal.
FTSE 250 constituent PayPoint provides payment services through thousands of convenience stores across the UK.
Its network supports areas from household bill payments and mobile top-ups to parcel collection, returns and now over-the-counter postage.
Collect+ already operates more than 14,000 out-of-home (OOH) parcel locations across the UK, with almost 8,000 of those offering Royal Mail collect, send and return services.
As part of the new deal, 500 sites have been upgraded to provide Royal Mail over-the-counter services, including in-store postage sales.
From October, nearly 8,000 sites will feature Royal Mail Shop branding, with further expansion and the introduction of self-service kiosks expected in 2026.
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“We are delighted that Royal Mail has invested into the Collect+ business, which has seen strong growth over the past 5 years as we have established it as the leading open OOH store network in the UK,” said Nick Wiles, chief executive of PayPoint.
“The addition of Royal Mail over the counter services and Royal Mail Shop branding is an exciting development for our retailer network and is another example of how we deliver vital community services across the UK, including local banking, parcels and broader access to cash services.
“We are also pleased today to be announcing a proposed special dividend and share consolidation, which combined with our ordinary dividend and continuing in year share buyback, will result in over £90m of returns to shareholders in the current financial year.”
Alistair Cochrane, interim chief executive of Royal Mail, added: “The launch of the Royal Mail Shop brand creates a new and improved high street destination for all of our customers’ parcel needs in one location.
“With postage available to buy in store, and opening hours including evening and weekends, the shops are giving customers greater flexibility in how they collect, send and return their parcels.
“This investment is one of the ways we’re making Royal Mail more convenient. We have the UK’s largest network of out-of-home parcel points – from lockers to solar-powered postboxes – and we’re focused on being the nearest and simplest choice for our customers.”
Alongside the investment, Hertfordshire-based PayPoint has announced a special dividend of 50p per share, subject to shareholder approval at a general meeting on 17th October.
A special dividend is a one-off cash payment made in addition to the company’s normal dividend, effectively an extra reward for investors.
In this case, shareholders on the register at the cut-off date will receive 50p for every share they own. To balance this, the firm is also carrying out a share consolidation (12 new shares for every 13 old ones), which is designed to keep the share price at a broadly similar level after the payout.
The board expects the deal and dividend package to be earnings-enhancing from the first full year to March 2027.
Since the close of play yesterday, the business has seen its share price rocket – rising by over 10% to 746p – making it by far the biggest mover in the FTSE 250 index so far today.
Its market cap currently stands at £516.95m.
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