La Poste today unveiled a major international expansion of its parcel business with three separate deals by GeoPost to buy majority stakes in top Russian player SPSR and Brazil’s Jadlog and a strategic minority stake in Italian market leader BRT.
The acquisitions will deepen GeoPost’s operations in Europe, where it is number two in the parcels market, make it the biggest private player in the fast-growing Russian market and expand its footprint to South America for the first time.
GeoPost CEO Paul-Marie Chavanne told CEP-Research in an exclusive interview in February 2016 that the group remained interested in more international acquisitions, including possibly in South America and South-East Asia, while continuing to invest in organic growth.
In Italy, GeoPost yesterday acquired a 37.5% stake in BRT, the express market leader and DPD’s local partner for nearly 20 years, and also renewed the cooperation between BRT and DPD for the next five years.
The announcement follows a CEP-Research article in December about the planned acquisition, which has now gained European Commission clearance. Italian financial holding Corfin is also taking a stake in BRT, giving joint control of the family-owned company to the two new shareholders.
Through BRT, GeoPost will become the clear number one in the Italian domestic express parcels market. The Bologna-based company delivers more than 650,000 parcels daily through a nationwide network of 180 branches, integrated logistics and distribution services, and generated turnover of €1.27 billion in 2016.
“Thanks to a satisfactory 20-year alliance, BRT has been delivering its parcels in Europe through the extended DPDgroup network. Besides being Italy’s leading operator in the B2B express courier market, BRT has recently substantially increased its technical and organizational resources in order to adequately meet the challenges coming from the high growth of the e-commerce B2C express courier market in Italy,” GeoPost commented.
In Russia, GeoPost plans to merge its 100% wholly-owned subsidiary DPD Russia with SPSR, the leading Russian-owned private express delivery player, to create the largest private parcels company and number two behind Russian Post.
The French group said it has applied to the Russian competition authority to clear the merger and expects approval and closure in the first quarter of 2017. GeoPost took full control of DPD Russia in February 2016 by acquiring the 50% stake of Turkish partner Yurtici Kargo.
“The ambition of the merger is to create a global B2B/B2C player which will offer a comprehensive and enhanced range of courier and express services on the Russian market. The resulting synergies aim at accelerating the development of the new entity and more specifically at supporting the strong growth of e-commerce in Russia,” GeoPost explained.
With sales of about 7.5 billion roubles (more than €120 million), DPD Russia is currently the third-biggest player on the Russian CEP market followed by SPSR Express. DPD Russia delivered more than 18 million parcels in 2016 through a network with 125 depots.
Fast-growing SPSR Express, with a nationwide network of 15 distribution centres and 200 branches, had sales of 6 billion roubles in 2015, including strong double-digit growth in the B2C business.
SPSR said in a separate announcement that GeoPost would own a majority stake in the newly combined company, with a large minority stake held by Elbrus Capital and the remaining shares by the company’s management. The two companies would initially continue to operate under their existing brands.
CEO will be Nikolay Voinov, head of DPD Russia from 2008 to 2013 and then md of Itella Russia until November 2016. SPSR managing director Vladimir Solodkin will become Chairman of the Board of Directors and will lead the Strategic Development Committee. The Board of Directors will also include Sergey Kruglov, who will represent the interests of GeoPost.
Explaining its reasons for the deal, SPSR said the merged company would be able to expand its B2C business by investing in its products, network and IT infrastructure, while continuing to develop services for B2B customers.
"The combination opens up the possibility for qualitatively new development not only for the combined company, but for the market as a whole,” said Solodkin. “We will focus on new technological solutions that can radically change logistics."
"Customers will be the main beneficiaries,” added Voinov. “Both companies have unique competencies in the B2B and B2C segments, which will develop and implement the best services and the content and quality, and value. We want to create a company that will become the market leader not only in terms of volumes, but will also be the standard for customer service and reliability.”
In its third deal, GeoPost has expanded to South America for the first time by acquiring a 60% stake in JadLog, currently the second-biggest player on the Brazilian CEP market. In 2016, the company delivered more than seven million parcels and increased revenues by 12% to 406 million Brasilian reals (more than €110 million).
Operating for more than 11 years in the market, JadLog stands out for the quality of its services, GeoPost pointed out. The company has one of the largest door-to-door distribution systems, capable of serving all Brazilian municipalities, through more than 500 franchises installed in all regions and its extensive road and air linehaul network.
Overall, GeoPost posted sales of €5.7 billion in 2015. Its parcel delivery network, DPDgroup, the second-largest in Europe, delivers 3.6 million parcels to over 230 countries each day.
