DHL Express is to sell off its Romanian subsidiary Cargus four years after buying the firm inits latest exit from a domestic market in order to focus on its international business.
Cargus, understood to be profitable, will be acquired for an undisclosed sum by Abris CapitalPartners, a CEE-focused mid-market private equity fund that last year bought Polish courier companySiodemka.
The two companies signed a share purchase agreement on 18 October 2012 with a view to completingthe transaction at the end of the year or early in the first quarter of 2013, pending approval fromthe Romanian competition authorities, DHL Express announced.
The deal will see Abris acquire full ownership of Cargus, the number 2 player in the Romanianparcel delivery market, including its customer base and employees and facilities along with alldomestic delivery operations within Romania performed by Cargus.
Cargus International SRL, with some 900 employees, a nationwide network of hubs and warehousesand a delivery fleet of over 500 courier vehicles, had sales of more than €20 million in 2011. Thecompany was acquired by DHL in 2008 as part of its former strategy of expanding in domesticmarkets.
The takeover will further extend Abris’ experience within the Eastern Europe domestic deliverymarket, after the successful acquisition of the Polish domestic courier company Siodemka in 2011.The deal will represent its first acquisition in Romania and signals its interest in making furtherinvestments in Central and Eastern Europe’s second-biggest economy, to capitalise on expectedgrowth as it recovers after a period of recession.
The structures of DHL Express Romania and Cargus International will remain unaffected, with DHLfocusing on its international express delivery services and Cargus focusing on its domesticbusiness. For DHL, the spin-off of its domestic delivery operations in Romania is in line with thecompany’s strategic focus on its core Time Definite International business.
In order to leverage the core strengths of both companies and ensure continued high quality ofservice for customers using both domestic and international express services, the parties haveentered into a wider supplier relationship, under which Cargus will continue offering DHL Expressinternational services via the Cargus sales and retail network.
“This decision was taken with a view to maximising the long-term potential of our business inthe Romanian market,” explained Alexander Morozowski, CEO, DHL Express Central and Eastern Europe. “ DHL is the world leader in Time Definite International, and by focusing on this segment in themajority of markets where we operate, we expect to further strengthen our leadership position. Thisdevelopment will undoubtedly bring benefits for customers in Romania, as both DHL Express andCargus respectively focus on what they do best.”
Cezar Scarlat, Managing Director and Head of Abris Romania, commented: “After a protractedrecession, Romania is emerging as the second-largest economy in CEE with a renewed focus on growth.Abris has identified the business service sector in general, and the domestic courier business inparticular, as a key beneficiary of that rebound. When the opportunity arose to acquire DHL’sdomestic business, with its strong management, excellent service quality, good brand, strong clientbase, nationwide network and solid financials, we teamed up with senior managers to acquire thebusiness. Our focus going forward will be to continue serving both the fast-growing B2C marketwhich is benefitting from the take-off of e-commerce and the large B2B segment which we intend togrow in terms of market share.”
Alex Neuber, Senior Partner at Abris Capital Partners, added: “Our confidence in being able togrow and expand the business of Cargus is also rooted in the strong performance of Siodemka, ourPolish domestic courier business acquired in 2011. Its management has positioned it to be a majorbeneficiary of the strong growth in e-commerce in Poland, and we intend to share best practices andinnovative products between the Polish and Romanian platforms, in order to create a compellingcustomer proposition in both markets for e-commerce providers and retail customers alike.”
Daniel Kearvell, Managing Director, DHL Express Romania, said: “With Abris, we remain committedto ensuring our customers continue to receive the high standards of service to which they havebecome accustomed. We will work closely with Cargus and Abris to ensure a smooth transitionprocess. Going forward, our focus on Time Definite International express services will guaranteethat DHL Express remains the provider of choice for the Romanian market over the long term.”
Gian Sharp, Cargus CEO-designate and co-investor with Abris, explained his decision to invest inthe Romanian company. “Having served with DHL for twenty years, including as CEO of DHL Romaniasince 2001 and as CEO of Cargus since 2008 until recently, I am delighted to team up with Abris tore-energize the business and put it onto a growth trajectory.”
Ovidiu Paun, COO-designate of Cargus and a 20-year veteran of DHL, added: “We have plans toexpand and modernise the fleet, utilise our newly-gained tracking capability to offer an improvedB2C product, and continue to offer best-quality to our business, e-commerce and cash customers. Themanagement team is excited about this opportunity, and looks forward to working together with ourPolish colleagues from Siodemka and Abris to make it happen.”
With around 500 employees working for DHL Express, DHL Freight and DHL Global Forwarding, DHL asa whole remains a significant employer in Romania.
Abris Capital Partners, established in 2007, is a leading private equity fund manager focused onmid-market investment opportunities in the major countries of Central and Eastern Europe (CEE) andhas built a portfolio of fast growing and successful businesses located throughout the regionand across a diverse range of sectors. The company operates from offices in Warsaw, Kiev andBucharest, and manage two funds in excess of €700 million.
DHL has been advised during the transaction by KPMG Corporate Finance as well as RTPRAllen&Overy. Abris has been advised by Clifford Chance Badea during the transaction and byPricewaterhouseCoopers Romania for financial and tax due diligence.
