UK Mail surges on Deutsche Post deal

28th Sep 2016 07:46

(ShareCast News) - Shares in UK Mail Group surged on Wednesday after Deutsche Post agreed to buy the integrated mail and parcel operator for 440p per share, valuing the company at £242.7m.The offer represents a premium of 43.1% over the closing price of UK Mail on Tuesday.Deutsche said the deal will allow it to bring its expertise in e-commerce and parcel delivery together with UK Mail's existing customer base and network, to drive substantial shareholder value.In particular, the acquisition will strengthen the European market position of DHL Parcel, adding a commercial and operational presence, including pick-up and delivery capabilities in the UK, Europe's largest e-commerce market.In addition, Deutsche Post said the deal will strengthen UK Mail's market position in the UK and deliver significant synergy benefits.Deutsche Post board member Juergen Gerdes: "The ongoing expansion of our parcel network in Europe is driven by increasing demand within our e-commerce customer base for cross-border deliveries. Deutsche Post DHL Group, as the leader in the German parcel market, has already established a strong position in a number of European countries."UK Mail is a well-run business and an established provider of quality delivery services in the UK and offers a complementary fit with our integrated offering. With this acquisition, we will further extend our network and have a strong foothold in Europe's three largest e-commerce markets, the UK, Germany and France, which account for over 60% of online retail in the continent.""The directors of UK Mail intend to make a unanimous recommendation that company shareholders accept the offer.RBC Capital Markets upped its price target on UK Mail, which it rates at 'sector perform', to 440p from 380p to match the offer price.It said it saw one of the US operators as a natural suitor but these have now largely filled their UK 'gaps' through other acquisitions and organic growth, so a competing offer is relatively unlikely.At 0924 BST, UK Mail shares were up 43% to 440.39p.