8 Oct 2021 07:00
Royal Mail plc
(Incorporated in England and Wales)
Company Number: 8680755
LSE Share Code: RMG
ISIN: GB00BDVZYZ77
LEI: 213800TCZZU84G8Z2M70
8 October 2021
ROYAL MAIL plc (RMG.L): GLS AGREES TO ACQUIRE ROSENAU TRANSPORT IN CANADA TO COMPLETE COVERAGE OF CANADIAN MARKET
Royal Mail plc (RMG.L) announces that its subsidiary, General Logistics Systems (GLS), has agreed to acquire Canadian logistics company Mid-Nite Sun Transportation Ltd (the 'Acquisition') one of the largest independent freight carriers in Western Canada that operates as 'Rosenau Transport'. The shareholders of Mid-Nite Sun Transportation Ltd are (via holding companies) members of the Rosenau family, the Rosenau Transport management team and their families.
The combination of the two businesses will create a network stretching across Canada which will enable GLS to cover the vast majority of the Canadian population and deliver further growth and synergies. It also provides a link to GLS operations along the US West Coast, unlocking significant growth opportunities with new and existing customers as the Rosenau Transport network moves to the combined GLS freight and parcel model. There is also the opportunity for revenue synergies by selling freight and parcel services into/out of the Rosenau Transport network, including cross border services.
The total consideration is C$360.0 million (approximately £210.5 million) on a debt and cash free basis. The Acquisition will be funded through existing cash and borrowing facilities and is expected to be earnings and cash flow accretive to GLS and Royal Mail Group in the current financial year ended 31 March 2022.
Rosenau Transport generated unaudited revenue of C$175.0 million2 and EBITDA of C$41.6 million2 in the 12 months ended 31 August 2021, with a mid-teens % operating profit margin. It has 24 owned facilities throughout four provinces, and as at 31 August 2021 gross assets were C$197.3 million2. The Acquisition is subject to customary closing conditions and regulatory approvals.
The addition of Rosenau Transport complements and enhances GLS' strategy to deliver change and sustainable growth, through strengthening the GLS international network and its position as a cross-border player.
Canada is the world's 9th largest economy3 with a combined parcel and freight market of approx. C$25 billion4, growing around 5% per annum4. GLS entered the Canadian market in August 2018 following the acquisition of Dicom. Today GLS Canada operates a network of 2 hubs and 27 depots, with around 1,400 employees. Since Dicom was acquired it has delivered revenue growth of around 8% p.a. with a mid-teens operating profit margin in FY2020-21.
Rosenau Transport will be fully consolidated within GLS for reporting purposes after the transaction closes. The parties intend to close the transaction on 1 December 2021 subject to customary closing conditions and regulatory approvals.
Martin Seidenberg, Chief Executive Officer, GLS, said: "The addition of Rosenau Transport to GLS complements and enhances our Accelerate strategy. With its strong presence in Western Canada, high quality, entrepreneurial culture, as well as freight capabilities and parcel potential, Rosenau Transport's model is similar to our existing Canadian business and provides an excellent fit. I look forward to welcoming Ken and the Rosenau Transport team to GLS and capturing the significant opportunities ahead of us."
Rick Barnes, President of GLS Canada stated: "As we link two regional carrier networks together, with direct service to most cities and towns in the country, we will produce one of the most integrated transportation systems in Canada. The extended geographical reach will provide our 30,000 clients with a new, national and international alternative for all of their shipping needs".
Ken Rosenau, President Rosenau Transport commented "Rosenau Transport is excited to join the GLS family and align with an industry leading organization that will open new opportunities and markets on a global scale. The combined networks of GLS and Rosenau Transport will allow us to offer a comprehensive Canadian solution to better serve our clients. We look forward to working closely with Rick Barnes and the GLS Group to continue to champion our company's motto - "Our Business is Built on Service, For our Customers, For Each Other and For our Communities".
Enquiries:
Investor Relations
John Crosse
Email: investorrelations@royalmail.com
Royal Mail investor relations line: 020 7449 8183
Media Relations
Helen Reynoldson
Phone: 07483 302 245
Email: helen.reynoldson@royalmail.com
Mark Street
Phone: 07515 924 344
Email: mark.street@royalmail.com
Royal Mail press office: press.office@royalmail.com
Company Secretary
Mark Amsden
Email: cosec@royalmail.com
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements concerning the Group's business, financial condition, results of operations and certain Group's plans, objectives, assumptions, projections, expectations or beliefs with respect to these items. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would', 'should', 'expects', 'believes', 'intends', 'plans', 'potential', 'targets', 'goal', 'forecasts' or 'estimates' or similar expressions or negatives thereof.
Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the Group's actual financial condition, performance and results to differ materially from the plans, goals, objectives and expectations set out in the forward-looking statements included in this document.
All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to the Group or any persons acting on its behalf are expressly qualified in their entirety by the factors referred to above. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. No assurance can be given that the forward-looking statements in this document will be realised; actual events or results may differ materially as a result of risks and uncertainties facing the Group. Subject to compliance with applicable law and regulation, the Group does not intend to update the forward-looking statements in this document to reflect events or circumstances after the date of this document, and does not undertake any obligation to do so.
ABOUT GLS:
GLS, General Logistics Systems B.V. (headquartered in Amsterdam), is one of the largest ground-based providers of deferred parcel delivery services in Europe with a growing presence in North America. GLS has a growing international footprint which currently includes around 40 countries and nation states.
The 'Accelerate GLS' growth strategy builds on GLS' strengths and addresses the growth opportunities in various markets. It has three key objectives: strengthen GLS' top position in the cross-border deferred parcel segment; strongly position GLS in the 2C parcel market, whilst securing its leading position in the 2B segment; and implement innovative digital and sustainable solutions that are centred around customer needs.
In FY2020-21, GLS generated £4,040m revenue (of which 9% was from North America), which accounted for 32% of total Group revenue (before intragroup eliminations) and £358m adjusted operating profit (51% of total Group adjusted operating profit). GLS has around 21,000 employees, 715 network hubs, c. 25,000 parcel shops and c 1,5005 depots.
Further information about GLS' strategy is included on pages 21 to 23 of our 2020-21 Annual Report.
1. GBP:CAD rate of 1: 1.7101
2. Prepared in accordance with the Accounting Standards for Private Enterprises (ASPE) of Canada.
3. Source: The World Bank GDP ranking (2021).
4. Source: Company estimates.
5. Excludes Italian franchises.