HDN aims to capitalise on online shopping boom with DHL deal

The deal, for an undisclosed sum, will create a business with more than 600 million in annual sales and which delivers more than 180 million parcels a year.

HDN said it will retain all 4,700 staff employed by DHL Domestic, which is the UK parcel arm largely specialising in deliveries between businesses. It will also transfer its 71 service centres, a headquarters at Heathrow airport and five hubs in Hatfield, near Manchester, Bristol, Leeds and the Midlands.

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

It cut full-time employee numbers by around 10 per cent and axed ten of its 60 depots in the past 18 months, while DHL Domestic has also come under pressure.

DHL said it decided to offload the business, which accounts for around 9 per cent 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 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.

Chairman Gary Monk said: "It capitalises on a significant opportunity for growth in parcel delivery, which is expanding strongly thanks to e-commerce."

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

HDN 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.