TNT Post UK to launch nationwide deliveries with new investor

TNT Post UK is to become a joint venture between Dutch owner PostNL and a Lloyd’s Bank equityfund to finance its long-expected nationwide rollout of ‘final mile’ end-to-end deliveries (E2E) in

After seeking a partner since February to finance the delivery service expansion, PostNLannounced today that it would form a joint venture with LDC, an investment arm of the Lloyd’s Bankgroup. The Dutch company will retain a 40% stake in TNT Post UK.

TNT Post UK, with 2012 revenues of €699 million, is the leading postal challenger to Royal Mailwith a broad product portfolio. To date, it has used Royal Mail for final mile deliveries under its‘downstream access’ agreement but has started making own deliveries in London and Manchester.

“The joint venture will provide the funding and expertise for the phased implementation of theE2E service, following the successful trials in London and recent extension to Manchester,” PostNLannounced. “The joint venture will encompass all the current TNT Post UK operations, which includesthe downstream access activities, and will be led by the current TNT Post UK management team.”

PostNL said that the rollout of the E2E network will be funded by LDC and the Royal Bank ofScotland (RBS) “upon completion” but did not state the size of the investment required to set uphome deliveries across the UK. However, the sum of some €50-80 million has previously been reportedto set up a delivery network over the next five years, creating up to 20,000 jobs. 

Marcel Krom, PostNL Executive Committee member responsible for the international activities,commented: “With this joint venture PostNL is able to maintain its strategy to be number 2 in theEuropean markets in which it operates. The successful trials in London have shown that TNT Post UKcan build a real, profitable alternative to Royal Mail, by meeting customers’ demand for quality,innovative and cost effective services. PostNL is confident that the new combination willcontribute to the positive development of a fast changing mail market.”

Yann Souillard, Managing Director at LDC, commented: “TNT Post UK represents a great opportunityto partner with an exciting business led by an ambitious and forward-thinking management team. Thebusiness’ E2E strategy is an innovative and dynamic approach to postal delivery which shouldprovide an exceptional platform for both customer requirements and the business growth plans.”

Since 1981, LDC has completed over 440 investments and supports a portfolio that stands at over70 businesses across the UK, and is collectively valued in excess of £2billion.

The transaction is subject to a number of conditions, including approval by the EuropeanCommission and is expected to close early 2014.

PostNL said it will have a 40% stake in the joint venture. Under the new accounting rules forjoint ventures, the financial results of the UK activities will be equity accounted for aftercompletion of the transaction (in the line “Investments in Joint Ventures and Associates”).Accordingly, the segment results of its International division will consist of Germany, Italy andSpring in future.