DHL Express will reduce its stake in Indian domestic express market leader Blue Dart from 81% to75% to meet new Indian stock exchange rules rather than buying out minority shareholders to gain
full ownership.Under the incoming stock exchange regulations, companies listed on the Bombay Stock Exchangemust ensure they have at least 25% of their shares in public ownership by 3 June 2013, thuslimiting majority ownership to 75%, or be fully taken over.
DHL Express, which currently owns 81.03% of Blue Dart Express, thus had the choice of selling a6% stake or acquiring the remaining 19% held by Indian institutional and private investors.
Earlier this year Deutsche Post DHL bought the remaining 24% stake in its Indian freightforwarding business from its partner to gain 100% ownership, and re-branded it from DHL LemuirLogistics to DHL Logistics. This move increased speculation in India that a similar move might beplanned for Blue Dart, whose share price had already risen strongly in previous months.
However, Deutsche Post DHL announced yesterday that it has decided to reduce the stake held byDHL Express Singapore Ptd Ltd in the listed Indian company so that Blue Dart could comply with thefuture minimum public shareholding requirements. The Blue Dart share price dropped about 12% todayin response to the news.
Deutsche Post DHL stressed in a statement: “The future collaboration between Blue Dart ExpressLtd. and Deutsche Post DHL will not be affected by this transaction at all and Deutsche Post DHLremains fully committed to the Indian market.”
A company spokeswoman told CEP-Research: “Deutsche Post DHL and Blue Dart Express will continueto cooperate as they have been doing for a number of years. There is strong trust between theDeutsche Post DHL and Blue Dart Express management teams and the relationship will not beaffected by the proposed reduction in Deutsche Post DHL’s stake in Blue Dart Express as the primaryaim for such reduction is to ensure Blue Dart Express to comply with Indian regulations.”
The timing of the share sale has not yet been decided but will be within the stipulated timeperiod, she added.
Senior Deutsche Post DHL executives had already signalled the move in recent months by stressingthe value of the Blue Dart brand and that there were no plans to merge DHL Express India and BlueDart Express in future. Malcolm Monteiro, DHL Express CEO South Asia, told CEP-Research in aninterview in July that Blue Dart is “a highly respected brand”.
At an operational and commercial level, Blue Dart acts as the local collection and deliveryprovider across India where DHL Express is not present and cross-sells DHL’s international expressservices. Blue Dart’s domestic air express network is largely separate from DHL Express operationsbut the two businesses are increasingly cooperating with new joint facilities such as at Bangaloreinternational airport. In addition, the Indian company has expanded its chain of “Blue Dart – DHLOne Retail” stores to 475 locations and plans 1,000 co-branded stores by 2015.
In 2011, Blue Dart Express, which has 8,000 staff at nearly 400 locations and a fleet of 7,350vehicles and six cargo planes, made a net profit of €18 million on revenues of €231 million andtransported 99 million shipments. In comparison, DHL Express India, with 1,700 staff and 400vehicles, carried some nine million international shipments last year.
