Post Danmark, CVC buy stake in Belgian postal service for EUR300 million

Denmark's national postal service, Post Danmark A/S, said Wednesday it and its minority shareholder CVC Capital Partners have invested EUR300 million (USD361 million) to buy a 49 percent stake in Belgium's La Poste-De Post.

The Belgian state would retain the remaining 51 percent of the shares in La Poste-De Poste, the country's postal service.

"The strategic partnership was part of the modernization of the Belgian postal service," Post Danmark and CVC said in a joint statement.

Belgium also had been looking for a partner to help modernize its service. The government had said it intended to remain the majority shareholder in La Poste with the decision-making center remaining in Belgium.

La Poste-De Post is Belgium's main postal service with some 35,000 employees.

In June, the Danish government sold a 22 percent stake in Post Danmark to investment company CVC Capital Partners, while 2.5 percent of the company's shares were made available to Post Danmark's nearly 22,000 employees. An additional 0.5 percent will be reserved as an incentive for senior staff. The Danish state controls the remainder.

12.10.05 – Belgium Post report on 'strategic partnership':
The Post enters into a strategic partnership with a consortium composed of Post Danmark and CVC Partners Limited

The Belgian State and De Post NV van publiek recht/La Poste SA de droit public (“The Post” or the “Company”) have reached an agreement with a consortium composed of Post Danmark A/S (“Post Danmark”) and CVC Capital Partners Limited (together “the Consortium”) to establish a strategic partnership for The Post. Further to this agreement, the Consortium will acquire 50 % minus one share of The Post’s capital stock through a capital increase of 300 M€ and will enter into a Cooperation agreement with The Post. Simultaneously, The Belgian State will participate in the capital increase for an additional amount of 40 M€ and is to remain the majority shareholder with 50% plus one share. Following this transaction, The Post will retain its legal status of corporation of public law.

The agreement formalizes the common ambition of the Belgian State, The Post and the Consortium to cooperate in pursuing the modernization of the Company. The end-goal of the modernization effort is to secure The Post’s position as a competitive operator on the European market for postal services, with high standards in service and quality and attractive financial returns to all shareholders. The strategies and key action lines that have been developed to enable the achievement of these objectives are set out in a joint Development Plan for The Post that has been prepared over the summer.

A key focus of the joint Development Plan is to modernize and to transform The Post’s retail network, with an aim to improve customer satisfaction. This will be realized by, among other things, reducing queuing time and by better tailoring location, proximity as well as opening hours of the retail outlets, to customer needs. The reshaping of the retail network will be implemented progressively over the next five years. During this period the overall size of the network – currently consisting of around 1,300 post shops – will largely be maintained. In addition, it is intended that The Post will maintain a post office staffed by post personnel in each of the 589 Belgian municipalities, where customers will have access to the most widely used postal public services including certain financial transactions.

Another key priority of the joint Development Plan is the commitment to develop The Post into a workplace with a high degree of involvement and empowerment of the employees. Several initiatives are planned in this respect, such as staff development and training, the introduction of “self supporting teams” and the set-up of a total quality program. Furthermore, the parties have agreed to an approach that relies on natural attrition to manage overall staffing levels in line with the operational needs.

As part of the strategic partnership and to assist The Post in realizing the joint Development Plan, Post Danmark and The Post have signed a Cooperation Agreement in the context of which Post Danmark will second to The Post trained and qualified employees having a particular strategic or operational expertise to support the Post on specific projects. These experts will support the analysis, planning and implementation of the various modernization initiatives.

Johan Vande Lanotte, Vice-Prime Minister and Minister of Public Enterprises remarked: “Post Danmark has already successfully solved a great number of challenges that are currently being faced by The Post. I am confident that the Consortium’s assistance will enable The Post to successfully continue its modernization, while improving the service to the Belgian public and enhancing employee satisfaction.”

Johnny Thijs, CEO of The Post, underlined the strategic importance of the agreement for the future of the Company: “Three years ago I stated that The Post needed a strategic and operational partner. Today I am happy to see that realized. I am convinced Post Danmark and CVC will help us with their know-how, their quality drive and operational expertise to reach excellence as an efficient service provider.”

Helge Israelsen, CEO of Post Danmark A/S, stated: ”Our aim is to assist in developing the correct strategies and to help adapting the structures and working methods of the Company. A constructive dialogue with the employees and the employee representatives will be high on the priority list in this respect, as it was the case while Post Danmark transformed itself into a performing postal operator.”

Geert Duyck, Senior Managing Director of CVC Capital Partners Benelux NV/SA, declared: “After our investment in Post Danmark, we are excited to enter into the capital of The Post. Through our Board representation, we intend to support The Post in its modernisation efforts and to leverage our comprehensive European business network in order to offer The Post access to specific know-how and expertise regarding general strategic and operational issues.”

This transaction is subject to clearance by the European Commission under Council Regulation (EC) N° 139/2004/EC of January 20, 2004 . The closing of the transaction is currently expected to take place towards the end of the year.

The terms and conditions of this transaction have been approved by the Belgian State, the Board of Directors of the Société fédérale de Participations/Federale Participatiemaatschappij, the Board of Directors of The Post, the Board of Directors of Post Danmark and the investment committee of CVC Capital Partners.

On this transaction, The Belgian State and The Post were advised by Cleary Gottlieb Steen & Hamilton, Bank Degroof and Morgan Stanley.