UK’s leading postal and delivery service, Royal Mail plc, has announced the acquisition of a Canadian transportation and logistics company, Dicom Canada through its subsidiary General Logistics Systems (GLS) for C$360 million (£213 million) on a cash-free and debt-free (CFDF) basis. As per the announcement, this acquisition will start adding to Royal Mail Group’s earnings in the financial year ended March 2019 and the deal is not subject to regulatory approvals.
For the record, Dicom Canada, providing business-to-business parcel services, focuses majorly on the provinces of Ontario and Quebec in Eastern Canada, which together represent 57 percent of Canada’s GDP. It was bought out by American private equity firm Wind Point in 2014 and already has a well-built market position in the region, that could help GLS by leveraging the growth trends prevalent in these markets.
Chief Executive Officer of Royal Mail Group, Rico Back, said in a statement that Dicom Canada’s business model matches GLS’ strategy as the company offers high quality business services to the business-to-business segment. Dicom is also known for its reliability and outstanding customer satisfaction, he mentioned.
Back further added that this acquisition aligns well with GLS’ strategy to pursue targeted and planned acquisitions, aimed at growing in highly profitable markets outside of Europe. Citing reliable sources, the current management at Dicom will continue to run the company, including its president, Rick Barnes.
Reports indicate that in the financial year 2017-18, General Logistics Systems contributed 33 percent to the adjusted operating profit after transformation costs for the Royal Mail Group, which was a 29 percent increase over the previous year.
Dicom Canada supposedly operates a network of 28 depots, offers ground-based logistics, parcel and freight services. Providing pan-Canadian logistics services, it is also said to work with partner carriers across Canada and has experienced appreciable revenue and profit growth in recent years.