Royal Mail share price outperforms as group snaps up Canadian delivery company

Privatised postal service to pay £213m for Dicom

Royal Mail share price outperforms as group snaps up Canadian delivery company

Shares in Royal Mail Group (LON:RMG) have climbed higher in London this morning as the company announced that its General Logistics Systems (GLS) had acquired a Canadian parcel delivery company. The move marks the latest acquisition by GLS which has been looking to expand its footprint on the other side of the Atlantic.

As of 09:06 BST, Royal Mail’s share price had added 0.96 percent to 452.30p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.67 percent higher at 7,482.06 points. The group’s shares have added more than 15 percent to their value over the past year, as compared with about a 0.5-percent gain in the Footsie.

Royal Mail buys Canada’s Dicom

Royal Mail announced in a statement this morning that its GLS subsidiary had acquired parcel delivery company Dicom Canada from Wind Point Partners, a Chicago-based private equity firm, for a total consideration is C$360 million (approximately £213 million) on a debt and cash free basis.  The acquisition is not subject to regulatory approvals.

Dicom Canada primarily provides business-to-business parcel services, operating across Canada, with a major focus on the Eastern Canadian provinces of Ontario and Quebec. 

“This Acquisition is in line with GLS’ strategy to grow through targeted and focused acquisitions to capture higher growth segments outside Europe,” Royal Mail’s new chief executive officer Rico Back commented in the statement. Today’s deal follows GLS’ acquisitions of a US overnight delivery company operating in the Pacific Northwest and a business in California.

Analysts on FTSE 100 postal operator

The 16 analysts offering 12-month price targets for Royal Mail for the Financial Times have a median target of 500.00p on the shares, with a high estimate of 630.00p and a low estimate of 400.00p. As of August 31, the consensus forecast amongst 17 polled investment analysts covering the blue-chip group advises investors to hold their position in the company. 

As of 09:43 BST, Monday, 03 September, Royal Mail share price is 452.60p.

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