Home Delivery Network snaps up DHL Business

The deal, which was for an undisclosed sum, will create a business with more than 600 million in annual sales and delivers over 180 million parcels a year - equivalent to up to eight packages to every home in the UK.

Merseyside-based Home Delivery Network (HDN) said it will retain all 4,700 staff employed by DHL Domestic.

DHL Domestic, which is DHL's UK parcel arm largely specialising in deliveries between businesses, will also transfer over its 71 service centres, a headquarters in Heathrow and five hubs in Hatfield, Manchester, Bristol, Leeds and the Midlands.

HDN is hoping the deal will give it the scale needed to compete better against increasing numbers of delivery rivals and to grow its share of the delivery sector, which is being boosted by e-commerce.

It has had to cut full-time employee numbers by around 10% and axe 10 of its 60 depots in the past 18 months, while DHL Domestic has also come under pressure.

Business-to-business delivery firms have been branching out into the consumer delivery sector as the recession hits the business market hard.

Royal Mail has also been expanding its parcel business in an attempt to focus away from the declining letters market.

DHL said it decided to offload the business, which accounts for around 9% of its UK workforce, to exit the "highly competitive" UK parcel market.

It will instead focus on its international parcel business and remaining UK brands, including Same Day express services, DHL Freight and DHL Supply Chain.

DHL said: "The UK domestic parcel delivery marketplace is all about scale and high volumes which in turn drives operational efficiencies, and is highly competitive.

"Despite the recession, our management team has been very successful in substantially improving the performance of the Domestic business in the past year, however, we believe the time is right to divest the business to a strong UK operator."

HDN said it was a "transformational deal" for the group.

"It capitalises on a significant opportunity for growth in parcel delivery, which is expanding strongly thanks to e-commerce," according to Gary Monk, chairman of HDN.

The internet home delivery market is growing by between 5% and 15% each year, he said.

HDN chief executive Brian Gaunt added the acquisition "provides greater security to people within both organisations".

It will initially retain the DHL Domestic brand after the deal completes, which is due by the end of the first quarter.

HDN boasts a client list including many major UK retailers, such as Argos Tesco, Sainsbury's and Marks & Spencer.

DHL Domestic largely operates in the business-to-business market, although it also makes consumer deliveries.

It was bought by DHL five years ago from Securicor.