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DHL owner buys UK Mail delivery group

German mail company Deutsche Post, the owner of DHL, has agreed a £242.7 million deal to buy UK Mail, offering shareholders a premium of more than 40% on the previous closing price for the struggling company. 29 Sep 2016

The purchase will give DHL pick up and delivery capabilities in the UK, Europe's largest e-commerce market, and will strengthen its European market position, Deutsche Post DHL said.

UK Mail directors intend to recommend unanimously that UK Mail shareholders vote in favour of the scheme, the company said.

Juergen Gerdes, a Deutsche Post board member, said: "The ongoing expansion of our parcel network in Europe is driven by increasing demand within our e-commerce customer base for cross-border deliveries. Deutsche Post DHL, as the leader in the German parcel market, has already established a strong position in a number of European countries."

"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, which account for over 60% of online retail in the continent," he said.

Peter Kane, chairman of UK Mail, said: "The board believes that UK Mail will benefit significantly from becoming part of Deutsche Post DHL, and will be better positioned to continue to develop our parcels and mail businesses with the benefit of DHL’s greater financial and operational resources."

DHL is the leading parcel delivery company in Germany, Europe's largest parcel market by volume, and has expanded its cross-border network since 2014 to cover 18 European countries, it said.

UK Mail, founded in 1971, has a network of over 50 sites in the UK, including an automated national hub in Ryton which can process up to 20,000 parcels per hour, DHL said.

Munich-based mergers expert Eike Fietz of Pinsent Masons, the law firm behind said: "While there is certainly a strong case for Deutsche Post using this opportunity to strengthen its delivery network further, this can only be one piece of the strategy. Increasingly the challenge in the market becomes the last mile delivery of goods, with cities being congested with traffic, people spending less time at home and e-commerce growing. Giants like Amazon are experimenting with drones and even start-ups may soon be offering serious alternatives to traditional delivery networks. It will be interesting to see what parcel delivery incumbents like Deutsche Post DHL come up with."