German bank to sell Deutsche Post stake
KfW Group, the German state-owned development bank, said Wednesday that it would sell a 1.5 billion euro stake in Deutsche Post, increasing the proportion of freely traded shares to as much as 64.5 percent.
Merrill Lynch, UBS and J.P. Morgan Chase are offering the 70.8 million shares, worth about 1.9 billion USD, in Deutsche Post, Europe’s biggest postal service, on behalf of KfW Group, according to details of the sale sent to clients. The divestment, aimed at institutional investors, is equivalent to about a 5.9 percent stake in the Bonn-based company.
KfW, which owned 41.6 percent of Deutsche Post before the sale, will not sell any further stakes to institutional investors for the rest of this year, the Frankfurt-based bank said, adding that it did not rule out selling shares to individual investors during the period.
The bank had been free to sell its stake after a previous lockup period expired in May. Deutsche Post’s chief executive, Klaus Zumwinkel, said May 31 that he expected KfW to take several years to sell its entire holding and that the divestment would probably occur in blocks similar to the June 2005 sale of 126.5 million shares, or about 8 percent.
Shares of Deutsche Post fell 37 cents to close Wednesday at 20.49 euro in Frankfurt.
“This is just a normal market reaction because of dilution now that there are more shares available,” said Nils Machemehl, an analyst with M.M. Warburg in Hamburg. “The free-float will be bigger now, which is positive, so the shares will recover soon.”
Deutsche Post shares have suffered as the company’s DHL express-delivery unit has dealt with “ongoing pain in the U.S.,” following the purchase of Airborne Express, and “post-integration problems in Europe” following acquisitions in the region, said Andrew Beh, an analyst with ING Bank in London.
As investors await Deutsche Post’s second-quarter earnings statement, which is to be issued Aug. 1, “I’m very concerned about the underlying performance, and I think there’s more downside risk than upside,” Beh said. First-quarter profit rose 5 percent to 482 million euro, missing estimates for a 10 percent gain.
The German government transferred its shares to KfW in return for cash as a preliminary step before any sale to the market. The orders are being taken at “close to market” price, according to the offer details.
