Whistl’s end-to-end delivery expansion “on hold” as key investor backs out

Whistl’s end-to-end delivery expansion “on hold” as key investor backs out

Royal Mail’s main challenger in the UK’s last mile delivery market has had its future expansion shelved, after talks broke down over its investment backing. Whistl, formerly known as TNT Post UK, was to become a joint venture between original Dutch owners PostNL and its investment partners LDC after an agreement was reached in December 2013.

However, it appears that while the two organisations agreed to form a joint venture, with expectations that it would be completed in the first half of 2015, their discussions about LDC’s actual investment in the business were not completed.

LDC, a private equity business within the Lloyds Banking Group, was to have held a 60% stake in the Whistl venture, to PostNL’s 40% — with the Dutch firm effectively relinquishing control over the business.

But PostNL announced today that discussion between the two firms over the ongoing expansion of Whistl’s end-to-end (E2E) operation in the UK will no longer proceed.

The company said LDC was concerned about the “ongoing changes in postal market dynamics”, along with the complexity of the regulatory landscape.

In a statement, Dutch national postal service PostNL said: “Now that these discussions have concluded, we will assess alternative scenarios for Whistl’s E2E operations and remain committed to further developing Whistl’s successful activities in the UK. In the meantime, the roll-out of E2E continues to be on hold.”

At the time LDC formed its joint venture agreement with PostNL regarding TNT Post UK, the private equity firm had stated the business as an “exciting opportunity”, and that its end-to-end delivery strategy was an “innovative and dynamic approach to postal delivery which should provide an exceptional platform for both customer requirements and business growth plans.”


TNT Post UK launched its end-to-end delivery service in West London in April 2012, and by the end of 2014 had expanded within London and Manchester, as well as to Liverpool.

Under its new name, Whistl, it now delivers to 2m households, around 7.4% of all UK households, compared to 4.1% in 2013.

In the 2014 financial year, Whistl generated EUR 797m in revenue, and EUR 2m profit. Although its end-to-end business is growing, most of Whistl’s business remains in the Downstream Access market, collecting and sorting business mail before handing it to Royal Mail to deliver through its last mile network.

In February this year within its annual report, PostNL said it was continuing to discuss further investments in the end-to-end business in Whistl with “future partner” LDC.

It had allocated around EUR 174m worth of assets being “held for sale” in the expectation they would be transferred to Whistl as it fell out of PostNL’s control.

The company said that the reason its joint venture had not been established in 2014 was because the two companies had been waiting for regulator Ofcom to issue its guidance on the regulatory framework.

Whistl ended up losing a High Court battle last October over its attempt to have universal service provider Royal Mail lose its VAT exemption.

The exemption means Royal Mail does not have to pay VAT — which is at a 20% level at present — on certain services, which means it can offer prices to its customers that are potentially 20% lower than rivals.

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