Deutsche Post will pay 440 pence per UK Mail share, valuing the deal at USD 316 million, excluding debt, internetretailer.com reports.
Deutsche Post is seeking to extend its reach across Europe to tap into te rising demand for non-express deliveries as more people order household items online. It has parcels operations in 18 European countries, though lacks UK exposure after express-package unit DHL sold its UK domestic operations in 2010.
While UK Mail has only a 5% share of the regular UK parcels market dominated by Royal Mail, it has successfully shifted from a business-to-business to more consumer-oriented focus in line with demand. It also offers high delivery visibility, with live tracking and one-hour arrival slots, and tends to carry higher value items.
In the diminishing letters market, UK Mail and Whistl, a former unit of PostNL NV that was subject to a management buyout last year, together account for about 45% of volumes in terms of collection and sorting, though Royal Mail still makes almost all final deliveries under a state requirement, RBC said.
UK Mail was founded as a courier and express-delivery service before listing on the London Stock Exchange as Business Post in 1993. The company changed its name in 2009 after deregulation of the U.K. market meant it was able to compete with Royal Mail in the regular letters and parcels market.
UK Mail, based in Slough, west of London, has more than 50 depots and 2,400 delivery vehicles. Its directors unanimously back the Deutsche Post deal, describing it as fair and reasonable and offering “significant synergy benefits” as the German group directs business its way.
Royal Mail competes with Deutsche Post, which is about 20% state-owned, in the wider European market through its General Logistics Systems business. The 500-year-old service’s ambitions have broadened since the government sold a 60% stake in 2013.
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