GLS Acquires Golden State Overnight

RNS Number : 6158L

Royal Mail PLC

04 October 2016

 

4 October 2016

GLS ACQUIRES NEXT DAY PARCEL DELIVERY COMPANY, GOLDEN STATE OVERNIGHT

Royal Mail plc (RMG.L) today announces that General Logistics Systems (GLS) has acquired the regional next day parcel delivery company, Golden State Overnight Delivery Service Inc. (GSO).

GSO is a leading provider of regional next day delivery services principally in California¹. The acquisition provides GLS with a focused and targeted market position in this geography. GSO offers priority, ground and freight shipping services, mainly to business-to-business customers across a wide range of industries. It operates a hub and spoke network of 36 facilities, with around 1,900 employees.

The area in which GSO operates has a Gross Domestic Product (GDP) roughly equivalent to the UK². It is experiencing faster GDP growth than both the UK and continental Europe. With around 13.5 million deliveries per year, GSO has approximately 1% share of its addressable market³. It is well-positioned to benefit from growth in intra-State deliveries within its existing geographic footprint.

The total consideration paid for 100% of the shares in GSO is $90 million (approximately £70 million⁴), which will be funded from existing resources. The company is being acquired on a debt free, cash free basis. GSO generated revenue of approximately $114 million in the year ended 31 March 2016. The transaction is expected to be economic profit accretive⁵ for GLS in 2019-20.

GSO will be fully consolidated within GLS for reporting purposes but will be managed as a separate entity. The company was established in 1995 by Dana Hyatt, Chief Executive Officer, who will continue to lead the company, together with GSO's existing management team.

Rico Back, Chief Executive Officer, GLS, said: "The acquisition of GSO is in line with our strategy of careful and focused geographic expansion. GSO operates in an attractive regional market representing the world's fifth largest economy⁶, and provides GLS with an opportunity to grow GSO within its existing footprint."

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Media Relations

Royal Mail plc

Beth Longcroft on 07435 768 549 or [e-mail]

GLS

Anne Putz on [phone] or [e-mail] 

Investor Relations

Catherine Nash on 020 7449 8183 or [e-mail] 

Notes:

1.   GSO also operates in Arizona, Nevada and New Mexico

2.   World Development Factors, World Bank and US Bureau of Economic Analysis

3.   Addressable market includes States of California, Arizona, Nevada and New Mexico

4.   GBP:USD rate of 1:1.30

5.   Economic profit accretive: Post tax earnings minus (total amount invested x cost of capital)

6.   World Development Factors, World Bank and US Bureau of Economic Analysis. United States, China, Japan and Germany generated higher GDP than the combined GDP of California, Arizona, Nevada and New Mexico in 2015

This transaction follows the €71 million acquisition of ASM Transporte Urgente (ASM) by GLS's Spanish subsidiary in June 2016. ASM provides GLS Spain with significantly enhanced size and scale, enabling it to offer a comprehensive national and international service.

About GLS Group

GLS, General Logistics Systems B.V. (headquartered in Amsterdam), provides reliable, high-quality deferred parcel services for over 220,000 customers, complemented by logistics and express services. Through organic and inorganic expansion, the Group has grown to provide network coverage of 41 European states via wholly owned and partner companies, and it is globally connected via contractual agreements. 41 central transhipment points and more than 700 depots are at GLS' disposal. With its ground-based network GLS is one of the leading parcel service providers in Europe. In the financial year 2015-16 GLS achieved revenue of €2.2 billion.

About Royal Mail

Royal Mail plc is the parent company of Royal Mail Group Limited, the leading provider of postal and delivery services in the UK and the UK's designated universal postal service provider. UK Parcels, International and Letters (UKPIL) comprises the company's UK and international parcels and letters delivery businesses operating under the "Royal Mail" and "Parcelforce Worldwide" brands. Through the Royal Mail Core Network, the company delivers a one-price-goes-anywhere service on a range of parcels and letters products. Royal Mail has the capability to deliver to more than 29 million addresses in the UK, six days a week (excluding UK public holidays). Parcelforce Worldwide operates a separate UK network which collects and delivers express parcels. Royal Mail also owns General Logistics Systems (GLS) which operates one of the largest ground-based, deferred parcel delivery networks in Europe.

About GSO

Founded in 1995, GSO makes more than a million deliveries each month throughout California, Arizona, Nevada and New Mexico utilising 36 operating facilities. GSO customers enjoy a high level of customer service, including later pickup times, earlier deliveries, dedicated service representatives, and package tracking, all at market leading prices.

 

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