The British national postal service Royal Mail is looking overseas for growth and has made a foray into the Canadian market with the purchase of parcel delivery firm Dicom Canada. The purchase of the parcels firm is reportedly for $360 million CAD and that’s approximatley $275.7 million USD.
Dicom Canada says it offers ground-based parcel, freight and logistics services and operates a network of 28 depots and works with partners to provide pan-Canadian logistics services. The purchase has been funded by Royal Mail’s own resources and is not subject to additional borrowing needs.
The purchase is made under the auspices of the Global Logistics Systems (GLS) brand and the vendors are Dicom, a private equity firm called Wind Point Partners. Royal Mail has made significant investments in international markets since privatisation in 2013. Royal Mail appointed Rico Back (pictured above) as Royal Mail’s new chief executive in April and he previously headed up the GLS division.
This Acquisition is in line with GLS’ 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.
– Rico Back, Chief Executive Officer, Royal Mail Group
GLS generated over a third of Royal Mail’s 2017-18 adjusted operating profit, up from 29% a year earlier, the company said. The division served 212,000 customers via a network that operates in 37 European states and has 660 delivery depots.
The opportunity to make these expansions is exactly why Royal Mail was privatised: it gives it flexibility to expand into new channels and geopgraphies without too much interference from regulators and governments. This deal, for instance, will not be subject to scrutiny from regulators.