Deutsche Post DHL has reached an agreement to acquire UK Mail Group plc for £242.7m. The acqusition will give Deutsche Post DHL additional UK parcel revenues of £228m, pushing it into second place in the UK parcels market behind Royal Mail.

The acquisition announcement comes after FedEx’s acquisition of TNT, which would have propelled FedEx into second place, but now is demoted to third position in terms of parcel revenues. Royal Mail has the largest share of the UK parcels market with 33% share. More market analysis can be found in Apex Insight’s UK Parcels: Market Insight Report 2015.

The Board of UK Mail believes that the company will benefit significantly from becoming part of Deutsche Post DHL with its greater financial and operational resources. Deutsche Post DHL stated that the acquisition further extends its network in Europe’s largest ecommerce market.

UK Mail Group, formerly known as Business Post, divides its business into two segments: Mail and Parcels (previously there were additional divisions – Pallets and Courier Services). It also runs a service targeted at consumers and small business customers called iPostParcels. In its latest financial report, UK Mail posted revenues of £481.0 million with pre-tax profits of £10.7 million. The Parcels division posted revenues of £247.9 million (operating profit of £15.9 million) and the Mail division posted revenues of £233.1 million (operating profit of £10.1 million).

UK Mail has a network of 50 parcels depots covering the UK and Northern Ireland, including an automated national hub at Ryton, capable of processing up to 20,000 parcels per hour. The company has 2,800 employees and 2,400 vehicles.

The acquisition announcement comes at a difficult time for UK Mail, after recent problems at its automated sorting facility and subsequent profit warnings. Peter Kane will remain with UK Mail in a consultative role for one year acting as interim Chief Executive.

 
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