3rd Sep 2018 08:35
LONDON (Alliance News) - Royal Mail PLC said Monday it has acquired Canadian parcel delivery company Dicom Canada as part of the company's geographic diversification strategy.
Royal Mail's General Logistics Systems unit has acquired Dicom Canada from Chicago-based private equity firm Wind Point Partners for CAD360 million, or around GBP213.5 million. The acquisition does not include Dicom's US business.
"This acquisition is in line with GLS's strategy to grow through targeted and focused acquisitions to capture higher growth segments outside Europe. With its strong presence in Eastern Canada and primary focus on the business-to-business segment, Dicom Canada's business model is similar to GLS' as it provides a high quality delivery service, based on its focus on reliability and excellent customer satisfaction," said Royal Mail Chief Executive Rico Back.
In the 2018 financial year, GLS accounted for 33% of Royal Mail's adjusted operating profit after transformation costs, up from 29% in financial 2017.
The acquisition is expected to be earnings and cash flow accretive to Royal Mail in the financial year ended March 31, 2019, it said. Dicom Canada generated revenue of CAD233 million in the 12 months ended June 30.
The deal consideration will be funded through Royal Mail's existing loan facilities.
Dicom Canada primarily provides business-to-business parcel services, operating across Canada, with a major focus on the Eastern Canadian provinces of Ontario and Quebec. It will continue to be led by President Rick Barnes together with its existing management team.
Shares in Royal Mail were trading 0.2% higher at 449.00 pence each on Monday morning.
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