Deutsche Post DHL has reportedly joined the circle of potential investors in Royal Mail. Officialbids for a stake of up to 30%, which could cost up to £3 billion, are expected this month.
The German postal group is alongside TNT and British financial investor CVC on a shortlist offinal bidders for the holding, German newspaper Welt am Sonntag reported yesterday. A group ofsenior DP-DHL executives, led by CFO John Allan and including DHL Express Europe CEO Scott Priceand DHL Parcel Germany chief Uwe Brinks, held a meeting with the Royal Board board in London onMarch 23, it reported.
Deutsche Post DHL declined to comment on the information, the newspaper said. CEO Frank Appelsaid several weeks ago that the company has no strategic interest in other European national postaloperators, it noted.
So far only TNT has publicly stated that it is interested in the Royal Mail stake. UKministers are known to have held four meetings to date with TNT executives.
CVC has been active in the European postal sector in recent years though holdings in PostDanmark and Belgian Post. It will shortly increase its stake in Belgian Post to 49.9% by acquiringPost Danmark’s holding for €373 million. In exchange, it will sell its 22% stake in Post Danmarkback to the Danish state to enable the merger of Post Danmark and Swedish postal operator Posten.
The British government plans to sell a stake of up to 30% in Royal Mail (excluding the PostOffice network) to a strategic investor who would contribute managerial expertise and financialresources, while the heavy pensions deficit estimated at up to £6 billion would be taken over bythe government. British business secretary Lord Mandelson is expecting bids to be made this month,aims to reach agreement with an investor by the summer, and wants to implement the restructuringlater this year or in 2010.
The UK government stated in February that the selection of an investor would be based on theprice offered for the stake, the investor’s ability to transform Royal Mail and to successfulymanage stakeholder relationships. UK media have put the potential price for the stake at up to £3billion.
But the plan has generated widespread opposition within the ruling Labour Party. Last week,an all-party parliamentary committee criticised the plan as not clearly justified and “nottransparent”. In particular, it is unclear how much extra investment Royal Mail will need formodernisation and other measures once it has been relieved of the pensions burden and as a resultof regulatory changes, committee chairman Peter Luff said. The powerful CWU postal union alsoopposes the partial privatisation.
