TPG Shares Stable After DPWN Announcement
Germany's Deutsche Post (G.DPW) said Monday it will set up a mail distribution joint venture with Dutch publisher Wegener NV (N.WGN), aiming to become the second largest player in the Dutch postal market after former monopolist TPG NV (TP). Although the Dutch mail market is currently only 50% open, Deutsche Post said that within five years it is targeting a double digit market share of the liberalized market and expects its tariffs to be between 10% to 15% lower than those of rival TPG. The Dutch government owns a 35% stake in TPG while the German state still holds 69% of Deutsche Post. Currently, TPG has a monopoly on mail in the Netherlands under 100 grams, though that could change in 2006 when the market under 50 grams will be opened up. According to Deutsche Post board member Herbert-Michael Zapf, the liberalized market in the Netherlands is currently worth around EUR1.2 billion. Deutsche Post said it will hold a majority in the mail delivery joint venture. Both companies will merge their Dutch letter delivery businesses and work together on marketing and sales, the Bonn-based company said. In opening trading, TPG shares fell on the news but subsequently recouped losses as analysts said they didn't expect any impact on the company in the short term. 'It's inevitable that there will be more competition for TPG but the opening up of the market will be slow," said an analyst at Delta Lloyd. And TPG is currently preparing for it, restructuring domestically and aiming to expand overseas,' he said. Mail still generates more than 65% of TPG's earnings and serious competition could hurt TPG considerably down the line, unless it manages to compensate by sales elsewhere. TPG is trying to make headway in markets overeas but that has been slow as markets in Europe aren't fully liberalized yet. It plans to apply for a postal license in the U.K. following proposals to open the U.K. market to competition in May. TPG has also been working for some years now on building a European mail network by investing in direct and express mail companies in Italy, Germany, U.K. and a joint venture in Portugal as well as in Switzerland and Turkey. TPG plans to cut 5,000 postal delivery jobs via natural attrition over the next five to eight years due to an expected decline in mail volumes, yielding cost savings of more than EUR300 million a year. In a statement, TPG said that Deutsche Post's move into the Dutch market confirmed that the Netherlands is a favored playing field but said that other European countries, such as France, hadn't gone as far in opening their postal markets. 'TPG Post is broadly in favor of further liberalization of the European postal market, provided that there is a level playing field in an international context,' it said. The French postal market, one of Europe's largest, continues to be completely inaccessible to foreign postal companies. Deutsche Post will also take a majority stake in Wegener's unit Interlanden, a distributor of unaddressed advertising and door-to-door newspapers. Wegener Interlanden, founded in 1980, generated sales of EUR60 million last year and has some 450 employees. Deutsche Post's Selektvracht unit had sales of EUR52 million in 2001. Overall, Deutsche Post had sales of EUR33.4 billion last year. The company has expanded aggressively through acquisitions – it agreed Friday to buy the 25% of DHL International Ltd. that it doesn't own from German airline Deutsche Lufthansa AG (G.LHA) for EUR610 million. Shares in Deutsche Post have fallen 12% since January and at 1515GMT they were down EUR0.18, or 1.3%, at EUR13.37. TPG was trading up 3 cents or 0.1% at EUR22.03." (Source: Dow Jones, Neil Moorhouse reporting)
