Shares in private equity giant Apollo Global Management (APO) rose over 2% on Tuesday morning. This came after Europe’s antitrust regulator gave the company the go-ahead to jointly control UK-based logistics companies DHL eCommerce UK and EVRi in partnership with DHL Group (DHLGY), the German global logistics and postal conglomerate.
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DHL Group earlier in the year took a “significant” minority stake in EVRi, which is controlled by Apollo. This is even as EVRi, one of the largest dedicated parcel delivery firms in the UK, earlier in May agreed to acquire DHL eCommerce UK.
However, the European Commission cleared the deal, noting that it would not pose a threat to market competition in the continental bloc.
The latest update comes a few weeks after the UK’s Competition and Markets Authority also ratified the deal. The competition authority said the merger was unlikely to reduce competition and harm consumer choice in the UK.
Deal to Create a ‘Premier’ Delivery Business
Apollo acquired EVRi from Advent International last year in a £2.7 billion deal. Meanwhile, as part of the arrangement for EVRi to acquire DHL eCommerce UK, DHL Group, through its Dutch regional division DHL eCommerce International, took a minority stake in EVRi.
The arrangement means that both DHL Parcel UK, the holding company that operates DHL eCommerce UK, and EVRi will be jointly controlled by Apollo and DHL Group, although the former will wield more control. DHL Group has said that the merger will deliver “the UK’s premier parcel and mail delivery business.”
The merger of EVRi and DHL’s UK business operations is expected to create an entity with more than 30,000 couriers and van drivers under its belt. The combined entity will also boast 8,000 vehicles and 12,000 employees. DHL Group has stated that its goal is to deliver more than one billion parcels and one billion business letters annually.
Moreover, DHL Group said it will rebrand its UK operations to EVRi Premium next year. This will mark EVRi’s debut in the British business letter delivery market. The rebranded unit will continue to operate as a separate network, focusing on time-sensitive deliveries for high-value and large items.
DHL Group acquired its UK business from the courier and mail delivery firm UK Mail in 2016. However, UK Mail took on the DHL brand name about two years later.
Is APO a Good Stock to Buy?
Across Wall Street, Apollo’s shares have a Strong Buy consensus recommendation, as seen on TipRanks. This is based on 12 Buys and one Hold rating assigned by 13 Wall Street analysts over the last three months. Furthermore, the average APO price target of $164.75 indicates a 12% growth potential from the current level.
