Portugal is focusing on raising cash by planning to sell a 70% stake in postal operator CTT tofinancial investors on the stock exchange, ending the hopes of Brazil’s Correios, Spain’s Correos
and private express companies.The Portuguese government announced yesterday that it had decided to sell a 70% stake in CTTthrough an IPO and a direct sale to financial institutions who would have to sell on their stakeson the financial markets. 5% of shares will be reserved for CTT workers who will be able to buyshares at a 5% discount to the offer price.
The government has not yet indicated how much it hopes to raise from the privatisation. The IPO,which was a condition of the EU’s massive €78 billion aid for the financially troubled country, isexpected to take place later this year, possibly in December. The remaining 30% could sold off “inthe medium term”, according to Portuguese media.
The decision confirms the government’s long-standing preference for an IPO for the country’spostal operator, which has a double-digit operating profit margin, and dashes the hopes ofpotential strategic investors, including Brazil’s Correios, Spain’s Correos, and Portuguese expressfirms Grupo Rangel and Grupo Urbanos.
Correios confirmed to Portuguese media earlier yesterday that it was following the Portuguesepostal privatisation plans “with attention” but emphasised that “at this time” it did not have anydefinite plans to acquire a stake in CTT. The state-owned Brazilian postal group is aiming toexpand its international activities as part of its overall growth strategy.
Spanish postal operator Correos recently indicated its interest in expanding into neighbouringPortugal in order to create an “Iberian” postal operation. Ramon Aguirre, head of the Spanish stateholding company SEPI, said Correos is “negotiating the possible acquisition of a Portuguese postaloperator” to create a postal network to cover the whole Iberian peninsula. This comment raised thepossibility of a cross-border Spanish-Portuguese postal merger in the style of the Swedish-Danishcreation of PostNord.
Meanwhile, Portuguese firm Grupo Urbanos, which operates express parcels and logisticsbusinesses, said it remains interested in buying into CTT despite the IPO plan. It had previouslysaid it was ready to invest €500 – 600 million to buy the entire company. Company president AlfredoCasimiro told newspapers that he was interested in a majority holding and would continue to followthe privatisation process.
In contrast, Grupo Rangel, the local FedEx Express partner, has withdrawn its interest followingthe IPO decision. Owner Eduardo Rangel said his company had only been interested in taking acontrolling interest in CTT and was no longer interested “under these circumstances”.
CTT makes a healthy profit although it is suffering from falling mail volumes. In 2012 itsoperating profits rose 8% to €81.8 million but revenues dropped by 6.5% to €712 million, leaving an11.5% profit margin. In the first half of 2013, operating profits rose 4.8% to €38.9 million,revenues fell 3.5% to €349 million and the profit margin improved to 11.1%.
