Deutsche Post shows interest in Royal Mail

The UK government’s attempts to part-privatise Royal Mail gained some much-needed momentum on Sunday when rival Deutsche Post emerged as a potential bidder.

The UK government’s attempts to part-privatise Royal Mail gained some much-needed momentum on 5 April when rival Deutsche Post emerged as a potential bidder.

The German group joins TNT of Holland and CVC, the private equity firm, on a list of those thought to be considering taking a stake in the state-owned postal operator.

Lord Mandelson, the business secretary, wants to sell 30% of Royal Mail to a strategic investor but there are fears that the opposition from MPs and trade unions could complicate the search for a buyer.

Parliament is due to vote on a sale before the summer amid expectations of a revolt by backbench Labour MPs.

Deutsche Post declined to comment on a German press report that a team led by John Allan, finance director, had flown to London to discuss a possible investment.

A person familiar with the situation said Deutsche Post’s management had been very clear in the past that the company did not have a strategic interest “in taking over the restructuring of another European postal service”.

Nevertheless, the sale process represents “an opportunity to look at what might be hiding inside Royal Mail”, the person said.

Deutsche Post used to be the German government’s monopoly postal service operator.

It remains about 30% owned by Berlin and controls 87% of the German mail market but was privatised in 2000 and derives most of its revenues from its express delivery and logistics services, most under its DHL brand.

Any sale of a Royal Mail stake would come at a difficult time for Deutsche Post, which has only recently got rid of problem businesses including its Postbank banking subsidiary and its heavily lossmaking US express delivery service.

Investors may be concerned that its management, led by Frank Appel, chief executive, would be diverted once again by an acquisition that could require a considerable investment of time and resources.

After a year in charge, Mr Appel in March presented a strategic review of Deutsche Post, saying the company was well positioned strategically and would concentrate more on internal improvements to produce better returns.