Courier Firm Eyes Sale After City Link Crash

The owners of CitySprint, one of the UK's largest courier firms, have begun preparing to put it up for sale just weeks after the collapse of rival City Link cost more than 2,000 jobs.

Sky News has learnt that Dunedin, a private equity group, has hired advisers at Catalyst Corporate Finance to undertake a strategic review of its shareholding in the company.

CitySprint describes itself as the largest privately owned same-day distribution company in the UK and one of the top five same-day delivery operators in the world.

Since Dunedin invested in the delivery business in 2010, CitySprint has made a string of acquisitions, including the 2013 purchase of Heathrow Baggage Services, the Heathrow-based luggage repatriation, replacement and repair business.

Dunedin's strategy has paid off, with CitySprint recording profits in 2013 of £12.3m on turnover of £112.7m - a 12% increase on the previous year's revenue figure.

Insiders said on Monday that a sale or other exit for Dunedin was likely to be between 12 and 18 months away, and that no decision about what form that might take had yet been made.

CitySprint operates in the same-day delivery space, while peers such as City Link, which had been perennially loss-making prior to its collapse over the Christmas period, focused on next-day deliveries.

Better Capital, City Link's owner, blamed intense competition for the company's continuing struggles, and is likely to recover just half of the £40m it invested when it bought the business in 2013.

More than 2000 jobs have been lost so far, with Vince Cable, the Business Secretary, challenged by his Labour counterpart over why no more help was offered to City Link by the Government.

Sky News revealed last month that both Royal Mail (LSE: RMG.L - news) and DX Group were approached about a takeover of City Link, but discussions between them did not result in a deal.

Sources pointed out the differences between CitySprint's track record and business model, and those of City Link.

Announcing the acquisition in November of CYC Logistics, Nicol Fraser, a Dunedin partner who serves as a director of CitySprint, said: “Dunedin has worked in partnership with the management team at CitySprint to deliver a successful buy and build strategy over the last four years, enabling the business to experience rapid growth.

"This is the seventeenth acquisition for the business in four years and we remain dedicated to further increasing the scale of the business, reinforcing CitySprint’s position as the market leader in its field.”

A Dunedin spokeswoman declined to comment.