Exel to open books as Deutsche Post prepares for bid
Exel agreed to open its books to Deutsche Post yesterday to allow the German postal group to conduct limited due diligence ahead of a potential Pounds 3.8bn bid for its UK rival.
The decision follows discussions over the weekend between the two companies, which resulted in Deutsche Post making a preliminary takeover proposal.
The German group is understood to be offering a mix of cash and paper, with up to 30 per cent made up of shares, according to people close to the situation. The value of the bid is slightly more than Pounds 12 a share. Exel's closing share price yesterday was Pounds 11.85.
Deutsche Post aims to make an announcement on an agreed deal in one to two weeks. It is proposing cost synergies of Pounds 200m and has offered John Allan, Exel chief executive, a seat on its management board.
Mr Allan would head the combined logistics division, replacing Frank Appel, current head of logistics, who is seen as the likely successor to Klaus Zumwinkel, Deutsche Post's long-serving chief executive.
It is understood Mr Appel would take on a broad role akin to that of chief operating officer after any deal. He would remain on the management board in charge of several corporate functions, such as procurement and information technology.
Deutsche Post is trying to complete a deal quickly in an effort to thwart any rival bid from United Parcel Service, the package-delivery company. The US group has hired Goldman Sachs to assess a possible bid for Exel.
However, Deutsche Post may find it difficult to seal a deal quickly. Although many of its leading investors see the proposed deal as making strategic sense, some are concerned about financing.
Tim Albrecht, a fund manager at DWS, Deutsche Post's second largest shareholder, said he did not want the group to use its own shares in the deal. "If they are so persuaded by the merits of the deal, then they should finance it completely through debt," he said.
Union Investment, the fourth-largest shareholder, said the deal made sense but it would rather see Deutsche Post fix its DHL subsidiary in the US before embarking on a new acquisition.
Other shareholders, including Cominvest, have said they were worried about Deutsche Post overpaying, with many seeing Pounds 12 as the upper limit for a deal.
Deutsche Post mulls 1.5-bln-euro capital increase to buy Exel: report
Agence France-Presse English Wire 09-06-2005
FRANKFURT, Sept 6 (AFP) – Deutsche Post, the semi-privatised German postal service, is planning a capital increase of more than 1.5 billion euros (1.9 billion dollars) to finance its acquisition of British logistics group Exel, the business daily Handelsblatt reported on Tuesday.
Bonn-based Deutsche Post is to use the issue of new shares to pay for about one third of the acquisition price, the newspaper said, quoting financial sources.
The Financial Times Deutschland quoted sources close to the talks as saying that shares would make up 30 percent of the purchase price, which would be paid in a combination of cash and shares.
Based on the assumption that the purchase price would be 5.3 billion euros, that meant that the volume of the capital increase would be between 1.59 and 1.77 billion euros.
Exel and Deutsche Post revealed last week that they were in tie-up talks, but insisted negotiations were still at a very early stage.
Handelsblatt said that the Exel's management had already signalled its acceptance of Deutsche Post's preliminary offer and a definitive agreement could be signed in a matter of days.