Royal Mail's European subsidiary nets second big deal of recent months

Oliver Gill
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Royal Mail Misses All Performance Targets
Parcel deliveries at Royal Mail's European subsidiary have grown considerably (Source: Getty)

Postal giant Royal Mail has ventured into the US market by buying a next day delivery company in a deal that will cost the former state-owned company $90m (£70m).

Golden State Overnight Delivery Service Inc (GSO) which operates in principally in California, was bought by Royal Mail through its European subsidiary General Logistics Systems (GLS).

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Although letter deliveries at parent Royal Mail are declining, GLS has reported double-digit revenue growth and GLS's chief executive Rico Back said that the purchase was in line with strategic expansion goals:

GSO operates in an attractive regional market representing the world's fifth largest economy, and provides GLS with an opportunity to grow GSO within its existing footprint.

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In June, GLS purchased ASM Transporte Urgente (ASM) for €71m. It hoped that the deal would provide "GLS Spain with significantly enhanced size and scale, enabling it to offer a comprehensive national and international service".

GSO generated $114m of revenue in the last 12 months and also has a presence in Arizona, Nevada and New Mexico. GLS said that it didn't plan to meddle with the company after the purchase, saying that the US company would operate as a separate legal entity.

The corporate activity comes just a week after Deustche Post DHL swallowed up UK Mail for £243m – a price that led to shares rocketing over 40 per cent.

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