The Bitter 2000s M&A Case Study with Charles Brewer (COO, Canada Post)
By Unicast Entertainment
As a part of the 16th episode of its series of interviews with leading global figures across a range of industries, Unicast hosted Charles Brewer – COO of Canada Post, and Former CEO DHL Express. Among the various interesting conversations that took place, the discussion addressed a range of key industry issues – from the USPS controversy down south to the secrets behind the successes of the Singaporean startup ecosystem – and gave professional advice, particularly concerning the need to invest in oneself via further education and shifting geographically for work. Yet, an interesting case study that was brought up was DHL’s significant divestment from American pickup and delivery services in 2009. Why was this done? What lessons can be learnt from this?
In the 2000s, Deutsche Post – then, the world’s leading courier company – acquired DHL Worldwide Express and was gradually investing into further components of the DHL ecosystem and supply chain segments. As a part of their strategic vision to take this organisation ahead, they then commissioned a piece of research, as Mr.Brewer tells us, to identify the white spots where DHL did not hold a “number 1 or number 2 position.” One of the products of this research was the realisation that they did not have a domestic operation in the US, “which in itself was quite bizarre as this was where DHL Express started.” Instead of growing this segment organically, however, Deutsche Post decided to acquire Airborne Express, “a very distant third in the domestic American market” behind FedEx and UPS. The rationale behind this choice was that this would allow them to catapult operations in the US, making Deutsche Post a “viable third player.” Thus, the success of this acquisition – with Deutsche Post creating a management team to help facilitate this integration – was the sole determinant of the future of Deutsche Post-DHL in the US.
What followed is what Mr. Brewer describes as “a lot of things not going particularly well – some very serious things that didn’t go well and some lighthearted moments that also, in hindsight, weren’t very sensible.” A bittersweet recollection was brought forward by Mr. Brewer, who mentions the “very, very, very large billboard” placed opposite of the office of the CEO of FedEx displaying the following bold words: “The Roman Empire. The British Empire. Nothing lasts forever.” In addition to more significant mishandlings, the internal dishonesty within the management about the true success of the acquisition also contributed to the firm’s inability to identify and rigorously deal with any mistakes being made which exacerbated the failure of this acquisition. Eventually, the accumulation of these mistakes led to DHL halting domestic pickup and delivery services in 2009, leading to what Mr. Brewer calls difficult, yet decisive decisions which included laying off thousands of employees.
Urging students to read the many articles written about this DHL-Deutsche Post misstep, Mr. Brewer calls this a tough “business lesson” that taught him a lot about leadership. For one, he reiterates the importance of honesty within leadership to ensure that it is possible to make difficult decisions when necessary for the long-term health of an organisation. Secondly, he holds a fairly contrarian view, arguing that diversification isn’t always necessary – what is more important is to ensure that your team’s focus is the provision of better and improved goods and services in whichever market you can best specialise.
For more interesting insights, case studies and conversations with Charles Brewer, check
out this next Unicast episode at https://www.youtube.com/watch?v=eYmrviDmOyQ
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