# Royal Mail subsidiary General Logistics Systems to acquire Canadian logistics company Mid-Nite Sun Transportation

- Link: https://www.directorstalkinterviews.com/royal-mail-subsidiary-general-logistics-systems-to-acquire-canadian-logistics-company-mid-nite-sun-transportation/4121026819
- Published: 2021-10-08T07:31:31+01:00
- Author: Amilia Stone

**[Royal Mail plc](https://www.directorstalkinterviews.com/ftse-company/royal-mail/rmg.l)**(
LON:RMG) has announced that its subsidiary, General Logistics Systems, has agreed
to acquire Canadian logistics company Mid-Nite Sun Transportation Ltd, one of the
largest independent freight carriers in Western Canada that operates as ‘Rosenau
Transport’. The shareholders of Mid-Nite Sun Transportation Ltd are (via holding
companies) members of the Rosenau family, the Rosenau Transport management team 
and their families.

The combination of the two businesses will create a network stretching across Canada
which will enable GLS to cover the vast majority of the Canadian population and 
deliver further growth and synergies. It also provides a link to GLS operations 
along the US West Coast, unlocking significant growth opportunities with new and
existing customers as the Rosenau Transport network moves to the combined GLS freight
and parcel model. There is also the opportunity for revenue synergies by selling
freight and parcel services into/out of the Rosenau Transport network, including
cross border services.

The total consideration is C$360.0 million (approximately £210.5 million) on a debt
and cash free basis. The Acquisition will be funded through existing cash and borrowing
facilities and is expected to be earnings and cash flow accretive to GLS and Royal
Mail Group in the current financial year ended 31 March 2022.

Rosenau Transport generated unaudited revenue of C$175.0 million^(2) and EBITDA 
of C$41.6 million^(2) in the 12 months ended 31 August 2021, with a mid-teens % 
operating profit margin. It has 24 owned facilities throughout four provinces, and
as at 31 August 2021 gross assets were C$197.3 million^(2). The Acquisition is subject
to customary closing conditions and regulatory approvals.

The addition of Rosenau Transport complements and enhances GLS’ strategy to deliver
change and sustainable growth, through strengthening the GLS international network
and its position as a cross-border player.  

Canada is the world’s 9^(th) largest economy^(3) with a combined parcel and freight
market of approx. C$25 billion^(4), growing around 5% per annum^(4). GLS entered
the Canadian market in August 2018 following the acquisition of Dicom. Today GLS
Canada operates a network of 2 hubs and 27 depots, with around 1,400 employees. 
Since Dicom was acquired it has delivered revenue growth of around 8% p.a. with 
a mid-teens operating profit margin in FY2020-21.

Rosenau Transport will be fully consolidated within GLS for reporting purposes after
the transaction closes. The parties intend to close the transaction on 1 December
2021 subject to customary closing conditions and regulatory approvals.

> **Martin Seidenberg, Chief Executive Officer, GLS, said**: “The addition of Rosenau
> Transport to GLS complements and enhances our Accelerate strategy. With its strong
> presence in Western Canada, high quality, entrepreneurial culture, as well as 
> freight capabilities and parcel potential, Rosenau Transport’s model is similar
> to our existing Canadian business and provides an excellent fit. I look forward
> to welcoming Ken and the Rosenau Transport team to GLS and capturing the significant
> opportunities ahead of us.”

> **Rick Barnes, President of GLS Canada stated: **“As we link two regional carrier
> networks together, with direct service to most cities and towns in the country,
> we will produce one of the most integrated transportation systems in Canada. The
> extended geographical reach will provide our 30,000 clients with a new, national
> and international alternative for all of their shipping needs”.

> **Ken Rosenau, President Rosenau Transport commented **“Rosenau Transport is excited
> to join the GLS family and align with an industry leading organization that will
> open new opportunities and markets on a global scale. The combined networks of
> GLS and Rosenau Transport will allow us to offer a comprehensive Canadian solution
> to better serve our clients. We look forward to working closely with Rick Barnes
> and the GLS Group to continue to champion our company’s motto – “Our Business 
> is Built on Service, For our Customers, For Each Other and For our Communities”.

_Royal Mail Group plc is a British multinational postal service and courier company,
originally established in 1516 as a department of the English government. The company’s
subsidiary Royal Mail Group Limited operates the brands Royal Mail and Parcelforce
Worldwide._

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