The Royal Mail share price is in the spotlight in London. The stock is up by about 1% after the company made a major announcement about expanding to Canada. It is trading at 417p, which is about 3.67% above the lowest level this week.
In a surprise announcement, Royal Mail said that it would acquire Rosenau Transport in a deal valued at more than 210.5 million pounds. The deal, which will be secured by General Logistics Systems, will help it take advantage of the North American market.
Rosenau Transport describes itself as Western Canada “largest privately-owned shipping services carrier.” The company owns about 28 terminal locations throughout the country. Its services include Less Than Truckload (LTL), Full Truckload Freight (FTL), Flat Deck, small parcel, and warehousing among other services. In a statement, the head of GLS said:
“With its strong presence in western Canada, high quality, entrepreneurial culture, as well as freight capabilities and parcel potential, Rosenau Transport’s model is similar to our existing Canadian business and provides an excellent fit.”
The decision by Royal Mail to acquire Roseneau comes at a time when its domestic business is slowing. This has seen investors publish the RMG share price, which has crashed by more than 30% from its highest level this year.
The daily chart shows that the Royal Mail share price has been in a bearish trend in the past few weeks. The stock has crashed by more than 30% from its highest level this year. Notably, the stock seems to be about to do a death cross.
A death cross happens when the 50-day and 200-day moving averages make a crossover. In the past few days, the gap between the two averages has narrowed substantially, meaning that it could soon happen. The Relative Strength Index (RSI) has moved to the oversold level.
Therefore, the RMG share price will likely keep dropping as bears attempt to move below the key support at 400p. This view will be invalidated if it moves above the key resistance at 450p.