News broke this week that Germany’s Deutsche Post DHL Group was to acquire UK Mail Group in a £243 million deal but what will this mean for retailers and the delivery industry?
The company was originally founded in 1971 but had to announce two profit warnings last year after problems at its automated sorting facility meant it had to resort to manually handling bulky parcels. The turmoil also resulted in the departure of the company’s then chief executive Guy Buswell.
This week’s news saw the share price jump by more than 40% as investors welcomed the deal. The acquisition is likely to intensify competition in the UK market, putting particular pressure on the Royal Mail as Deutsche Post competes with it for parcel deliveries and meaning further service improvements for retailers to take advantage of.
More intense competition
Parcel broker ParcelHero believes the deal can only be good news for the sector since it will help boost Deutsche Post’s presence in the domestic UK parcels market and provide more intense competition. UK Mail has more than 50 depots and 3,500 delivery vehicles in the UK.
David Jinks, head of consumer research at ParcelHero, said that the takeover follows a strengthening of parcel operations across Europe by Deutsche Post with the company having now acquired or set up parcel operations in 16 European countries, he said.
Confidence despite Brexit
Jinks said it also showed confidence despite the impact of Brexit. “Obviously this purchase indicates the company is not over-concerned about the impact of Brexit on the UK parcels market and if the worst were to happen and tariffs are imposed on UK-EU shipments gives it a stronger foot in the UK domestic market, which could grow as more items are sourced and mailed from within Britain, rather than facing import tariffs,” he said.
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