UK Hays to demerge mail division
Hays, the services group transforming itself into a specialist recruitment business, has promised expansion of its mail operations after deciding to demerge the division, known as DX.
Colin Matthews, the chief executive who is leaving at the end of this month to take up the reins at water group Severn Trent, said Hays had decided against a sale of DX.
“We have not gone out to sell it. We have had expressions of interest – from private equity groups rather than mainland European postal operators,” he said. Mr Matthews, who has raised pounds 355m from 11 disposals of commercial and logistics businesses, added: “If we were to receive a credible and compelling offer we would consider it.”
The demerger is due to be completed by the end of this year, with existing shareholders to receive a share in DX for each one they hold in Hays. The business, to be listed in London, will be worth some pounds 250m.
Hays executives said a demerger was the “right mechanism” to release value to shareholders who are likely to receive cash of about pounds 200m as a result – perhaps even more.
Peter Brougham, DX managing director since January last year who will be chief executive after the demerger, said that over the next three to five years the business planned to expand by 100m mail items a year.
The business, which currently handles 350m items a year for business customers, especially legal and financial firms, employs more than 1,200 and could take on more staff in the coming years.
It differs from other rivals to Royal Mail by owning its own network for collecting and delivering mail door to door. Other competitors have signed deals with Royal Mail for the state-owned group to deliver mail over “the final mile”.
Mr Matthews, who is to be replaced by Denis Waxman, said the demerger would enable Hays to reach its goal of being a pure recruitment business more rapidly.
DX, which was formed in 1975, made an operating profit of pounds 16.3m in the first half on sales of pounds 65.5m and is based near Heathrow airport.
Mr Matthews said demerger was the final step in the transformation of Hays. DX, he added, was “a very profitable, highly cash generative” business operating in the deregulated UK postal market. Mr Brougham said he had no plans to expand into mainland Europe.
