Consolidation DP's top priority in Europe

Deutsche Post is looking at acquisitions in Asia, but has no plans to buy more companies in Europe or the US as it enters a phase of consolidation.
Asked what funds were still available for acquisitions, chairman Klaus Zumwinkel told IFW: “We don’t really think in terms of how much we have available. We have enough financial capacity to make small, medium or even big acquisitions.

“But our priority for the forseeable future is not acquisitions, but to integrate and streamline the operations we have. It is here we are spending money, such as the t150m we are spending integrating and upgrading activities in the Benelux region.

“Our main priority in the US is to integrate Airborne with DHL.” He estimated DP would spend between t1.5bn and t3bn over the next three years on integrating and upgrading operations and processes.

“If you really press me, we see a huge opportunity in Asia, especially China, where there could be a need to make acquisitions.” These would be regional companies rather than European or global companies with a strong Asian presence, he added. “But there are not so many acquisition targets there, so we are doing things organically at the moment.”

Fellow DP director Peter Kruse said India was another big market. “I think India is very underestimated and will be the one to follow China.

“It has a very specific character, but it is very big and we expect it to become a very important market. At the moment, of course, China is the name of the game.” Zumwinkel defended his decision to challenge UPS’s right to charter exclusive flights in Europe using the Danish airline Star – an apparent tit-fortat response to the legal challenge by UPS and FedEx to the airline DHL uses in the US, Astar.

“I had never even thought about these aircraft flying out of Cologne in UPS colours before and I didn’t mind if had those rights. But if that is not allowed in the US, then it should not be allowed in Europe.” Zumwinkel said he was also “very confident” the EC would return the fine it imposed on DP in 2002 for subsidising its commercial activities with money from monopoly mail profits, after Brussels recently agreed similar cross-subsidies for several European post office expansion activities.

“Our lawyers have a lot of material to work with, ” he said.

Posted: 20/10/2003