TNT parent TPG ponders UK Hays DX bid

TPG, the Dutch postal operator which has embarked on a big expansion programme in Britain, is considering a bid for the DX mail business of Hays, the services group.

The richly profitable Dutch group, which trades as TNT Mail in the UK, plans to challenge Deutsche Post to be Royal Mail’s biggest competitor.

Hays, which is transforming itself into a specialist recruitment business, said in June it would demerge DX by the end of this year in a move that could value the mail operation at GBP250m-GBP300m.

Former chief executive Colin Matthews said then that Hays had decided against selling DX but would consider a “credible and compelling” offer.

TPG, which has GBP1.25bn sales in Britain where it employs 18,000 people, is an admirer of DX, an operation that handles 350m items of mail a year for business customers.

DX employs 1,200 people and is attractive to Royal Mail’s growing number of rivals by offering door-to-door delivery.

This year, as the market opens further, Business Post, TPG and Deutsche Post have signed agreements with Royal Mail that pay a basic 13p an item to the state-owned group to deliver rivals’ bulk mail from its 73 mail centres.

The Dutch operator, which is targeting a 10percent share of the British market, according to insiders, has a long-term ambition to set up its own final delivery network but DX could help it to shorten this process.

The entire British postal market could be open to competition within two years – earlier than elsewhere in the European Union.

TNT Mail, which offers a 48-hour service, expects to offer business customers savings of between 5percent and 10percent – even though UK postal prices are the lowest in the EU.

It signed a two-year deal in June with Express Dairies, part of Danish group Arla, to deliver heavier items such as catalogues with the milk to 6m British households.

TPG, which is expanding in Britain and Germany to offset a 2percent annual decline in Dutch mail volumes, increased operating profits in the first half by 20percent to EUR605m (GBP405m) on sales of EUR6bn.

Margins on its mail business rose to 24percent compared with the minute ones enjoyed by Royal Mail. DX made GBP16.3m first-half profits on sales of GBP65.5m.