September 3, 2018 / 7:28 AM / 16 days ago

Royal Mail buys into Canada with C$360 million courier deal

(Reuters) - The international arm of Britain’s Royal Mail Plc (RMG.L) has bought Canadian parcel delivery company Dicom Canada for C$360 million (£214 million), adding to its growing operations in a number of U.S. states and across Europe.

Royal Mail vans are parked in the Leytonstone post office depot in London, Britain early July 6, 2017. REUTERS/Russell Boyce

The acquisition from Chicago-based private equity firm Wind Point Partners comes as Royal Mail aims to boost revenue share from outside the UK through its international unit, General Logistics Systems (GLS).

“This acquisition is in line with GLS’ strategy to grow through targeted and focussed acquisitions to capture higher growth segments outside Europe,” said Royal Mail Chief Executive Officer Rico Back, who until April served as the head of GLS.

GLS accounted for 33 percent of the Royal Mail’s 2017-18 adjusted operating profit after transformation costs, up from 29 percent a year earlier, the company said.

The deal, which takes Royal Mail into Canada, was funded through existing borrowing facilities and will be earnings and cash flow accretive in the financial year ending March 31, 2019, the company said.

Dicom Canada, which offers ground-based parcel, freight and logistics services, operates a network of 28 depots and works with partners to provide pan-Canadian logistics services, Royal Mail said, adding the Montreal-based company had posted good revenue and profit growth in recent years.

Reporting by Justin George Varghese in Bengaluru; Editing by Amrutha Gayathri

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