Deutsche Post DHL is selling off part of its holding in Indian express company Blue Dart to meetstock exchange rules and is switching from ratings agency Standard & Poor’s to Fitch on cost
grounds.The German-based group, which owns 81% of Blue Dart through DHL Express, is reducing its staketo 75% under new stock exchange rules and will sell the shares on the Bombay Stock Exchangetomorrow (November 23) for a ‘floor price’ of Rs 1,720 per share.
About a quarter of the 6% stake will be reserved for mutual funds and insurance companies. Nosingle bidder will be able to acquire more than 25% of the shares being sold, DHL Express Singaporeannounced in a filing to the stock exchange.
Blue Dart shares soared 20% today on the news, rising to Rs 2,056 and taking the company’smarket capitalisation to about Rs 48.8 million.
Deutsche Post DHL was forced into the move by changes to foreign ownership laws in India. Underthe incoming stock exchange regulations, companies listed on the Bombay Stock Exchange must ensurethey have at least 25% of their shares in public ownership by 3 June 2013, thus limiting majorityownership to 75%, or must be fully taken over.
In September, DHL Express, which has owned 81% of Blue Dart for several years, announced itwould reduce its stake to 75% rather than buying out minority shareholders to gain fullownership. Deutsche Post DHL stressed at the time that the share sale was purely a legallyrequired financial move and would not impact on the close cooperation between DHL Express and BlueDart.
Meanwhile, Deutsche Post DHL yesterday also announced that it has ended its long-standing ratingagreement with Standard & Poor’s for commercial reasons and will switch to Fitch Ratingsinstead as its second ratings agency alongside Moody’s.
S&P last confirmed its BBB+ long-term rating of Deutsche Post DHL with a stable outlook atthe end of August. Fitch yesterday issued an equivalent rating of BBB+ with stable outlook whileMoody’s current rating is Baa1 with a “positive” outlook.
DP DHL CFO Larry Rosen stated: “Solely for commercial reasons we have decided to cancel ourlong-standing and constructive working relationship with Standard & Poor’s. Thanks to ourfinancial strength, Deutsche Post DHL’s reputation on the capital market, and the ratings fromMoody’s and Fitch, we retain a strong capability to successfully execute capital markettransactions at attractive terms.”
