DHL Express has continued its re-focusing on international business with the sale of itsdomestic operations in Canada for about C$25 million (€18 million).
TransForce, a leading Canadian transport and logistics group, will take over the DHLExpress Canadian domestic business, which has annual revenues of about C$275 million (€196million) and about 2,000 staff. The transaction, which is still subject to regulatory approval, isexpected to close within thirty days. Canadian media put the undisclosed acquisition price at aboutC$25 million.
Under the agreement, TransForce is buying the assets of DHL Express Canada’s domestic businessand will take over its domestic operations through Loomis Express, a newly established subsidiaryof TransForce. DHL Express’ existing domestic management team will remain at the business to ensurecontinuity for all customers.
At the same time, TransForce and DHL Express Canada have signed a 10-year strategic alliance toprovide “a fully integrated and innovative domestic and international shipping and logisticsoffering” for Canadian and international businesses. DHL Express will focus on internationalshipping to and from Canada, while TransForce will provide domestic express within Canada and useDHL as its international partner. An integrated advertising campaign entitled “ThePower of 2” is being launched across Canada to promote the new alliance.
Loomis Express was the Canadian domestic express company acquired by Deutsche Post DHL in 2002as part of the group’s widespread expansion through high-profile and expensive acquisitions in thelate 1990s and early 2000s. At that time, Loomis had annual revenues of some €180 million and about3,000 staff.
Over the last few years, however, DHL Express has pulled out of loss-making domestic operationsin the USA, the UK, France and Ireland, and downsized activities in some other markets in order toconcentrate on the international express sector. However, there are some exceptions to thisapproach in lucrative growth markets where the company is continuing to invest and expand. Theseinclude China, Mexico and India (through subsidiary Blue Dart).
“Today’s announcement is a further execution of our global strategy to focus on our corecompetency, the growing international express business,” explained Ken Allen, Chief ExecutiveOfficer of DHL Express. “By entering into a strategic alliance with the market-leading domesticprovider, we can even better meet the dynamic and growing needs of our Canadian customers byoffering highest quality, seamless integrated shipping solutions that are second-to-none.”
The ‘international – domestic’ alliance strategy had worked very well in other major markets forDHL customers, Allen added. There would be no impact on other DHL businesses and operations inCanada from the sale, and with over 5,000 Canadian employees working for DHL Express, DHL GlobalForwarding, DHL Supply Chain, DHL Global Mail and Williams Lea, Canada continued to be an importantmarket for the Deutsche Post DHL group.
“This transaction is strategic to TransForce for several important reasons,” stated AlainBédard, Chairman, President and Chief Executive Officer of TransForce Inc. “This asset purchasewill solidify our position as a leading Canadian provider of package and courier services inCanada, plus the DHL partnership opens the door to international transport coverage for ourexisting customers. TransForce’s pan-Canadian infrastructure will deliver expanded Canadiancoverage to DHL’s domestic customers, and the combination of the two customer bases adds materialrevenue, creating greater scale in the market with superior efficiencies.”
The listed Montreal-based group has expanded in recent years through acquisitions in the parcel,trucking and logistics sectors. It acts as a holding company for subsidiaries that operate undertheir established brands. In 2010, the group had revenues of just over C$2 billion and made a netprofit of C$105 million.
The Package & Courier division had revenues of C$396 million last year, which was 19% ofgroup revenues. The four companies in this division are ATS, Canpar, Dynamex and ICS Courier. TheUS$248 million acquisition of US-based same-day courier Dynamex, which had revenues of US$418million in the year ending October 31, 2010, was completed in February this year. This year’s twoacquisitions will thus more than double the size of TransForce’s Package & Courier business. Asthe new Canadian number two, it will compete with market leader Purolator, UPS and FedEx and withsmaller companies.
Bédard added: “With our recent Dynamex acquisition, we are significantly increasing our densityin the Canadian package and courier sector. We are confident of our ability to successfullyintegrate these businesses as we have done in the past within the TransForce family of companiesand firmly believe that this latest purchase will benefit our shareholders. This transactionwill not create any changes in our other package and courier businesses as Loomis Express will be astandalone operation.”
