German giant buying UK Mail

Deutsche Post has struck a deal to acquire UK Mail for £242.7million, a move which will see it go parcel to parcel with Royal Mail.

The German postal giant is snapping up UK Mail as part of a European expansion. It creates the second largest integrated mail and parcel operator in the country behind Royal Mail.

Deutsche Post board member Jurgen Gerdes said: “The ongoing expansion of our parcel network in Europe is driven by increasing demand within our e-commerce customer base for cross-border deliveries.

“UK Mail is an established provider of quality delivery services in the UK and offers a complementary fit with our integrated offering.”

UK Mail was hit by problems at a new sorting centre last year meaning bulky parcels had to be handled manually,

“Deutsche Post saw a strategic buying opportunity”

increasing costs that ate into profits.

The tie-up will see UK Mail shareholders get 440p a share in cash and the offer assumes they will also be entitled to receive an interim dividend of 5.5p per UK Mail share. UK Mail directors are advising shareholders to vote in favour of the deal as they deem it “fair and reasonable”.

Andrew Jeffs, partner at Cavendish Corporate Finance, said: “UK consumers are amongst the most e-commerce savvy and the attractions of serving that market are behind this deal.

“UK Mail has had its own issues with the departure of its long-serving CEO and technical difficulties following the move to their new site causing the share price to halve in the last 18 months. Combined with the fall in sterling against the euro, Deutsche Post sawa strategic buying opportunity.”