Deutsche Post To Buy UK Mail In Boost To European Network

Fakhir Rizvi Published September 28, 2016 | 06:25 PM

FRANKFURT, (APP - UrduPoint / Pakistan Point News -27th Sep,2016) : Germany's Deutsche Post, owner of express delivery service DHL, on Wednesday said it had agreed to buy UK Mail in a push to strengthen its European foothold, while taking advantage of a post-Brexit vote slump in the pound.

The German logistics giant said it would pay 440 pence a share for UK Mail, valuing the company at 242.7 million Pounds (281 million Euros, $316 million). "With this acquisition, we will further extend our network and have a strong foothold in Europe's three largest e-commerce markets, the UK, Germany and France," Deutsche Post DHL group board member Juergen Gerdes said.

Shares in UK Mail shot up by more than 40 percent on news of the deal, while Deutsche Post shares gained 0.8 percent in afternoon trading in Frankfurt. CMC markets analyst Jasper Lawler said Deutsche Post had acted at the right time.

"It's an opportunistic buy for Deutsche Post, using a devalued pound and problems with UK Mail's new sorting facility to expand its stake, beyond its ownership of DHL, in the UK delivery market.

" The pound plummeted against major currencies immediately after Britain voted in June to leave the European Union, before regaining some ground.

But ongoing uncertainty over the Brexit fallout has continued to weigh on sterling, which hit a three-year low against the euro last month. The takeover will also see UK Mail step up competition with British heavyweight Royal Mail, whose privatisation was completed last year.

"UK Mail competes with Royal Mail in bulk letters and parcels. We would expect it to become a much more powerful competitor with the backing of a much larger, financially stronger and ambitious owner," analysts at Liberum said in a client note.

Deutsche Post last month reported its strongest-ever second-quarter results with a net profit of 541 million euros, up 66 percent on the year before, largely thanks to growth in online shopping and an increase in the price of stamps.