Royal Mail buys up Canadian parcel firm Dicom for £213m

Dicom primarily provides business-to-business parcel services.

Royal Mail is going to Canada (Chris Radburn/PA)
Royal Mail is going to Canada (Chris Radburn/PA)

Royal Mail has splashed out £213 million to acquire Canadian parcel delivery company Dicom from US private equity firm Wind Point Partners.

The deal, struck through Royal Mail subsidiary General Logistics Systems, is part of the company’s geographic diversification strategy.

Royal Mail boss Rico Back said: “This acquisition is in line with GLS’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’s as it provides a high-quality delivery service, based on its focus on reliability and excellent customer satisfaction.”

Dicom primarily provides business-to-business parcel services across Canada, with a major focus on the easterly provinces of Ontario and Quebec.

It generated revenue of 233 million Canadian dollars (£137.8 million) in the 12 months ended June 30 and the acquisition is expected to boost full-year earnings at Royal Mail.

Dicom will continue to be led by president Rick Barnes together with its existing management team.

Last year, GLS accounted for 33% of Royal Mail’s adjusted operating profit after transformation costs, up from 29% in financial 2017.

Shares in Royal Mail were trading nearly 1% higher on Monday morning.

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