The Royal Mail Plc is based in Britain but it has an international department which recently announced that they are not changing their courier costs but instead they are branching out by purchasing a parcel delivery firm based in Canada. Their newly acquired company is called Dicom Canada and the deal was sealed after they paid 360 million in Canadian dollars or also equivalent to £214 million. The new parcel delivery acquisition is only one in the long list of their international branches located all over the United States as well as Europe.
The new company was previously owned by the Wind Point Partners, a private equity company with headquarters in Chicago. The Royal Mail hoped that through their new acquisition, they will be able to improve the revenue share coming from country outside of the United Kingdom with the help of its international unit called GLS or General Logistics Systems.
According to Rico Back, the chief executive officer of Royal Mail who was sworn into the position on April after serving as the lead of General Logistics Systems, the acquisition was made because it coincides with the plan of the GLS to branch out and expand by buying companies that are within the target range and follows the same focus as the parent company. With this, they will be able to grow more outside of Europe.
For the fiscal year 2017 to 2018, GLS was responsible for bringing 33 per cent of the profit, adjusted number with transformation costs already deducted, to the Royal Mail. The company said that this percentage is higher than the 29 per cent that was recorded in the previous year.
Through the deal, Royal Mail was able to venture into Canada while the funding came from facilities that are in charge of borrowers. The company said that by end of March next year, they will be able to get a glimpse of the cash flow from this new company. They expect the courier costs to remain the same in order to cause fewer disruptions from its usual operation. Dicom Canada currently has 28 depots within its networks and is operating along with partners all over the country.