UPS eyes a UK-based acquisition
United Parcel Service is poised to make an acquisition in the UK, strengthening the US company’s position in one of Europe’s most fragmented package delivery markets. People familiar with UPS said the medium-sized deal could be announced as early as today, although they would not identify the British company involved. UPS declined to comment. The planned acquisition is believed to be in the package delivery sector, ruling out Exel, the large UK logistics group that has been linked with a takeover by UPS this year. The most likely candidates are all privately-owned companies, including ANC and Lynx Express.Business Post, the biggest UK-listed company in the domestic market, said it was not involved in any deal with UPS.
The Birmingham-based company has an alliance with FedEx, the other large US package delivery group, making it an unlikely target for UPS.
Other companies in the sector include Target Express, Tuffnells, Amtrack Express and Nightfrieght.
A UK acquisition by UPS would underline the Atlanta-based company’s ambition to increase its presence in Europe, where it is challenging the dominance of Germany’s DHL and TNT of the Netherlands.
UPS has become increasingly reliant on international revenues, especially in Europe and Asia, to offset slowing growth and increasing competition in the US.
The possible deal would signal an increase in foreign control over the fragmented UK market, which is divided between international competitors, such as DHL and TNT, and several small and medium-sized domestic companies.
Most of the domestic companies are controlled by private equity groups who invested more than $500m in the industry in a wave of deals in the 1990s.
An acquisition by UPS could be the catalyst for
the long-anticipated consolidation in the domestic market.
UPS would not be the first foreign group to strike a deal in the UK market. Interlink Express and GeoPost are both controlled by La Poste, the French postal group, while Securicor Omega was bought by DHL, part of Germany’s Deutsche Post. Dutch-owned TNT also has a large express delivery operation in the UK.
Initial City Link, another UK parcel delivery company, is owned by Rentokil Initial, the business services group.
The takeover of a package delivery company would mark a renewed focus by UPS on its core business
following several deals in other parts of the logistics sector.
UPS has been seeking to expand beyond package delivery into a range of supply chain services, fuelling speculation that it could bid for Exel, one of the world’s largest logistics groups.
A UK deal would underline the flurry of recent acquisitions by UPS, which is close to completing a $1.2bn (£688m) takeover of Overnite Corporation, a US truck company, and last year bought Menlo Worldwide Forwarding, an international freight forwarder.
Scott Davis, UPS’s chief financial officer, said in May that the company was on the look out for more deals.
