Post merger talks lasted eight months

Talks over the possible merger of the Royal Mail and Parcelforce with the Dutch post office lasted for eight months before being called off, it was revealed today.

MPs on a select committee appeared surprised at the detail of the discussions disclosed by Trade and Industry Minister Douglas Alexander.

He said the talks, about a joint venture rather than a takeover, were exploratory, and the Government was never called on to decide whether the public interest would have been served if the move had gone ahead.

The Government authorised discussions to be held between Consignia and Dutch postal firm TGP last July, but it emerged in March that common ground could not be found, Mr Alexander told the Trade and Industry Select Committee.

The minister said the talks were consistent with giving Consignia more commercial freedom.

There was also a view that the UK postal service had been missing “significant opportunities”, so there was the need to catch up with successful overseas competitors such as the Dutch.

The discussions foundered on a number of issues, including regulation and industrial relations, said Mr Alexander.

Martin O’Neill, the Labour chairman of the committee, said the MPs had not been well briefed on the talks and he told the minister he suspected they foundered because it would have been difficult for the Government to “sell” such a deal to the country.

Mr Alexander replied that it was appropriate that Consignia’s management should have held the discussions, although he made it clear that he did not believe the current focus should be on acquisitions or commercial partnerships.

“The focus of the management should be on getting the company on a stronger foundation,” he added.

Consignia has spent #600 million on around 20 acquisitions since it was given greater commercial freedom three years ago.

The biggest acquisition was a German parcels firm, but there has been little activity in the past year.