Royal Mail's GLG bags Dicom Canada for £213m
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16:40 26/04/24
Royal Mail's parcels arm has acquired Canadian parcel delivery company Dicom Canada for C$360m (£213m) as the group looks to increase its geographic diversification away from the UK and Europe.
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The deal, which will be funded through existing borrowing facilities, is expected to add to earnings and cash flow in the current financial year to 31 March 2019. The acquisition, from private equity firm Wind Point Partners, does not include Dicom's US business.
Dicom Canada, which primarily provides business-to-business parcel services mainly focused on Canada's eastern provinces of Ontario and Quebec, generated unaudited revenue of C$233m in the year to end-June and has experienced revenue and profit growth in recent years. Its 28 depots and partner carriers across Canada offer ground-based parcel, freight and logistics services.
Royal Mail said that Dicom Canada, which will continue to be led by current boss Rick Barnes and his management team, was "well-placed to leverage growth trends" in its markets and provides GLS with an established market position in the world's 10th largest economy.
Group chief executive Rico Back, recently promoted to the top seat from his role as divisional boss of GLS, said the acquisition was in line with the subsidiary'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," he said.
GLS accounted for 33% of the group's adjusted operating profit after transformation costs in the last financial year, up from 29% the year before.