Otto Group and Advent International Announce Partnership for Hermes

The Otto Group sells parts of Hermes to the investment company Advent International. This involves 75 percent of Hermes UK and 25 percent of Hermes Germany. In this transaction, Otto sees new opportunities to expand Hermes’ market shares in these two countries.

(Hamburg) One of the largest and most experienced private equity firms, Advent International (“Advent”), acquires 25 percent of the shares in Hermes Germany and 75 percent in Hermes UK. This step opens up new opportunities for the package logistics companies of the Otto Group to strengthen their leading position in the two most significant logistics markets in Europe.

As announced at the balance press conference on May 27, 2020, the Otto Group is entering into a partnership in the parcel delivery sector to unlock further growth potential in this competitive and rapidly growing business area. An agreement has been signed with the private equity investor Advent, which provides for the acquisition of 75 percent of the shares in Hermes UK and 25 percent of the shares in Hermes Germany by Advent. The transaction is subject to approval by the bodies and the relevant antitrust authorities.

Strong Market Position of Hermes

Both in the UK and Germany, Hermes has been able to continuously strengthen its market position in recent years – in the 2019/20 financial year, the companies transported over 760 million shipments. In the current financial year, both companies are experiencing significant volume growth in the context of the Corona pandemic. In response to this and against the backdrop of the expected continued growth in the parcel delivery industry, Hermes is further expanding its personnel capacities.

“The enormous interest from potential market partners in a stake reflects the attractiveness of the market segment and the excellent market position of Hermes in the two most significant markets in Europe. The partnership with Advent gives both companies further room for important investments and thus creates optimal conditions for further growth,” says Kay Schiebur, Otto Group Board Member for Services. “But Advent’s logistics expertise, for example in alternative delivery options, will also help us further develop our business model.”

Experience in Working with Family Businesses

Ranjan Sen, Managing Partner and Germany Head of Advent International: “Advent has extensive experience in successfully working with family businesses. We worked very well with the Otto Group during the acquisition of the payment service provider Ratepay in 2017. We look forward to deepening this relationship and further enhancing the potential of Hermes in this competitive and rapidly growing business area with our industry expertise.”

With this step, the Otto Group retains the majority of the shares in Hermes Germany in its core market Germany. In the UK, the Otto Group relinquishes the majority in Hermes UK but retains a say in important strategic decisions. The operational management of both companies will continue to be carried out by the current management. The collaboration with business partners and clients of Hermes also remains unaffected.

Improved Delivery Quality and Additional Services

“In recent months, Hermes has demonstrated, not least thanks to massive investments in a powerful and flexible network, that retailers and end customers can rely on consistently high delivery quality even in an unprecedented stress test like the Corona pandemic,” says Kay Schiebur. “At the same time, it becomes clear once again how essential a functioning competition in the market and the accompanying choices for customers are with regard to parcel services. We are pleased that we can now invest in even better delivery quality and additional services in partnership with Advent, thereby continuing our path to success.”

Advent’s stake in Hermes Germany also includes the other subsidiaries of the Hermes Germany Group, BorderGuru and Liefery, as well as Hermes Germany’s share in the joint venture ParcelLock. The activities of Hermes in Russia, France, and Austria, the parent company Hermes Europe, as well as companies not active in parcel delivery, namely Hermes Fulfilment, Hermes Einrichtungs Service, Girard Agediss, Hansecontrol, and Otto International, remain unaffected by the partnership.

About Advent International

Advent International was founded in 1984 and is one of the largest and most experienced private equity firms in the world. The company has conducted over 350 private equity transactions in 41 countries and manages assets of 44 billion euros (as of March 31, 2020). With 15 offices in 12 countries, Advent has a globally integrated team of over 200 investment professionals in North America, Europe, Latin America, and Asia. Advent focuses on advising buyouts and growth capital investments in five core sectors: financial services and business services; healthcare; industrial and chemicals; retail, consumer goods, and leisure; as well as technology. Advent has extensive experience in working with family businesses in Germany. Notable examples include the close and trusting collaboration with the founding family in the realignment of Douglas Holding, a leading European retail group, as well as the successful cooperation with the Otto Group in the acquisition of the payment specialist Ratepay. Even after 35 years of international investment activity, Advent remains true to its investment approach of generating sustainable revenue and profit growth for its portfolio companies through collaborative partnerships with management teams.

Photo: © Otto Group

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