Partnerships / Acquisitions

Private Equity Firm Advent To Buy 75 Pct Stake Of UK Parcel Deliverer Hermes In $1.3B Deal

Advent To Buy Stake Of Parcel Deliverer Hermes

Boston-based Advent International, a global private equity firm focused on overseas buyouts, has purchased a stake in the United Kingdom’s parcel delivery group Hermes for 1 billion euros ($1.3 billion).

The Financial Times (FT) reported Advent will acquire 75 percent of the company’s parcel delivery business in Leeds, England, from the Otto Group, the German mail order company and one of the world’s biggest eCommerce companies. It will also take a 25 percent stake in its German business.

The goal for Advent is to profit on the surge in online sales.

Online shopping is "booming as a result of coronavirus,” Martijn de Lange, CEO of Hermes UK, told FT, and the investment from Advent will help Hermes expand its delivery operations.

But the firm said it cannot predict how a global economic downturn would impact consumer spending or how badly it could hurt its operations.

“I think the online surge will overshadow it, but there will definitely be a slowdown which will impact our business,” de Lange told FT. “What’s important is that the retail industry doesn’t have too many casualties.”

Nick Rose, a managing director at Advent, told FT that the deal is part of a long-term investment around the fulfillment of eCommerce. He said he expects the peak in demand this year to set records.

Frank Proud, director of Apex Insight, said Hermes’ U.K. business is "consistently growing market share" with "industry-leading margins," according to FT. Still, he warned that if Amazon chooses to compete with Hermes’ primary business of serving retailers, the U.K. business would have a hard time succeeding.

“Competing with Amazon is never the best place to be,” he told FT.

In May, FedEx may have been looking to acquire a stake in Hermes. FedEx has a very limited presence in Europe’s delivery circuit, and Petra Scharner-Wolff, finance chief of Hermes, said at the time that the company’s efforts to find a strategic partner for parcel delivery sparked broad interest.

In 2016, FedEx acquired TNT Express, an international courier delivery services company based in the Netherlands, to boost its B2B shipments.



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