Royal Mail has written down the value of two recent US acquisitions by 85%, triggering questions from shareholders.
The postal company acquired Golden State Overnight in 2016 and Postal Express in 2017, for a total of approximately £80 million, through its GLS intinternational parcels division.
However, Royal Mail has written down their value by £68 million to just £12 million.
Shareholders will reportedly confront Royal Mail’s management to discuss the reasoning behind its recent spree of North American acquisitions, including £213 million for Dicom Canada.
Credit: Ethan Hoover
Last month, Royal Mail warned that annual profits would be lower than expected, with shares hitting their lowest since the company went private in 2013. Profits for the first half of the year had more than halved.
Royal Mail said the writedown was due to a merging and restructuring of the two US companies, and to account for goodwill, the amount that was paid in excess of the acquisitions’ actual net assets based on an estimate of future potential earnings. The restructured business will be a single west coast operation that uses third-party contractors.
“For us, an interstate network on the wets coat of the US makes strong sense,” said Shane O’Riordain, Royal Mail’s director of corporate affairs. “From our perspective the transition will take time, but it will be successful. Like other major companies, we always engage with our shareholders in detail following our results. We are doing just that right now.”
Source: Financial Times