TPG always mentioned
It is no wonder that TPG is mentioned whenever other European postal services are looking for a partner. In the third quarter, the Dutch postman delivered 13 per cent underlying growth in net income, with revenues up 5 per cent, mostly because of organic increases. That was one of TPG’s weaker quarters lately, largely because of lower profitability in its domestic business. Like its rivals, it suffers from increasing competitive pressures, especially in direct mail. But in terms of operational efficiency and capital discipline, it remains far ahead of the likes of Britain’s Royal Mail and Germany’s Deutsche Post.
That may not be enough to give TPG an edge in the sale of a 25 per cent in state-owned Post Danmark. Its German rival has also put in a bid and tends to be much more generous on the acquisition trail. Moreover, Post Danmark is already relatively well-run. Even if TPG were to secure guarantees that it will eventually get control over the business, the amount of efficiency improvements through skill transfers looks limited. Given the lack of operational synergies, it is hard to see how a deal could make financial sense.
A far better bet may be Belgium’s La Poste, also looking for a partner. TPG might well be the right one, not only because of its geographic proximity. It should also offer ample opportunities for cost-cutting, by redesigning La Poste’s delivery processes along the lines pioneered in Holland. That might serve as a template for further foreign ventures. With the pace of European postal liberalisation picking up again, it should encounter no shortage of targets. The bigger risks lies in execution, as its small but long-suffering logistics business illustrates. Unfortunately, its valuation at 0.8 times sales still leaves little room for disappointments.
