DHL Express to sell off domestic Romanian business Cargus
DHL Express is selling its domestic express delivery business in Romania, Cargus, in a management buyout supported by private equity fund Abris Capital Partners. The two companies revealed this week that they have signed a share purchase agreement with the aim of completing the deal at the end of this year, or early in 2013.
The deal, which is subject to approval by Romania’s competition authorities, will see Abris and senior managers as full owners of Cargus complete with infrastructure, employees and a “prestigious” customer base.
Abris is already involved in the courier business in Eastern Europe, buying Polish firm Siodemka last year.
When the Cargus acquisition is completed, the domestic Romanian business will remain a supply partner for DHL Express Romania’s cross-border business, as part of the agreement that was signed on Thursday.
Alexander Morozowski, the DHL Express Central and Eastern Europe CEO, said: “This development will undoubtedly bring benefits for customers in Romania, as both DHL Express and Cargus respectively focus on what they do best.”
Cargus has been operated by DHL as a separate company from its cross-border operation, DHL Express Romania, since DHL snapped up the company in 2008. The company has a nationwide network of hubs and depots, with a fleet of 500 courier vehicles and a workforce of about 900.
The company had sales of about EUR 20m in 2011.
With the transfer to Abris, both Cargus and DHL Express Romania will keep their current structures.
Gian Sharp, Cargus CEO since 2008, is co-investor with Abris and has been named as CEO-designate for Cargus after its buyout. DHL veteran Ovidiu Paun is COO-designate.
He said the new ownership would “re-energise” the business and put it onto a growth trajectory.
“We have plans to expand and modernise the fleet, utilize our newly-gained tracking capability to offer an improved business-to-consumer product, and continue to offer best-quality to our business, ecommerce and cash customers,” he said.
DHL said it would continue to have a work force of about 500 in Romania in its express, freight and forwarding divisions.
Time-definite international
DHL Express, which has spent the last few years pulling out of various domestic delivery operations in markets around the world, is currently focussing its efforts on international time-definite delivery.
DHL had the intent to turn Cargus into the number one player in the Romanian domestic courier market when it originally bought the company, but said it was currently the number two player in the market.
Morozowski said the decision has now been taken to sell the business to maximise DHL’s long-term potential in the Romanian market.
“DHL is the world leader in time definite international,” he said. “By focusing on this segment in the majority of markets where we operate, we expected to further strengthen our leadership position.”
DHL Express told Post&Parcel earlier this month that the major part of its worldwide withdrawal from domestic markets is complete having pulled out of domestic operations in markets including China, the US, France, Canada, and the UK, but there may be further withdrawals from smaller domestic markets.
Abris
Cargus will remain a supply partner for DHL Express Romania following the management buyout
Abris Capital Partners, a Polish company with offices in Warsaw, Kiev and Bucharest, is an equity fund manager that focuses on mid-market companies in Central and Eastern Europe.
The company acquired Polish domestic courier company Siodemka in 2011, and intends to make more acquisitions in Romania with the expectation that the economy is recovering there.
Cezar Scarlat, managing director of Abris Romania, said: “After a protracted recession, Romania is emerging as the second-largest economy in Central and Eastern Europe, with a renewed focus on growth. Abris has identified the business service sector in general, and the domestic courier business in particular, as a key beneficiary of that rebound.”
Abris said Cargus had a strong management, good brand and strong client base in Romania, with “excellent” service quality and a “solid” financial performance.
The company said its belief in the potential for Cargus stemmed from the “strong” performance of Siodemka in Poland, and the prospects of growth in online retail within the region.
“Our focus going forward will be to continue serving both the fast-growing business-to-consumer market, which is benefiting from the take-off of ecommerce, and the large business-to-business segment, which we intend to grow in terms of market share,” said Scarlat.
