Could Deutsche Post DHL become a real UK parcel competitor to Royal Mail?

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On Wednesday Deutsche Post DHL announced it would be acquiring UK Mail. We wrote about that here.

The £243m deal represents 440p for each UK Mail share up 43.1% up on UK Mail’s closing share price of 307.5p on Tuesday 27th September. Needless to say, the directors have encouraged the deal.

At the close of play on the stock markets on Wednesday, the offer had an impact on Royal Mail shares. Royal Mail stocks were down 3.3 per cent to 386.2p. And pundits suggest that the deal could be bad news for Royal Mail long term as the arrangement could bring new competition to the UK parcels market.

Goldman Sachs said the news represents “significant negative implications for Royal Mail if Deutsche Post DHL were to follow up with a more aggressive expansion in parcels in the UK market. DHL could emerge as a strong competitor over the coming years, thus taking away volumes and revenues from Royal Mail (which derives £3.2bn, or 33 per cent of group revenues from parcels in the UK).”

This could be good news for British online merchants. But not Royal Mail shareholders. What do you reckon?

One Response

  1. Cheaper parcel post is all well and good but we should be careful what we wish for.

    No other company will deliver our large letters for the same costs as Royal Mail.

    Neither will they offer 1 price for the whole of the U.K.

    They have their faults but to lose them would be a disaster.

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