Deutsche Post set to purchase Exel
Deutsche Post is set to announce an agreed takeover of Exel on Monday that values the UK logistics company at about £3.6bn ($6.5bn) and could create the world's biggest logistics group.
The German group was holding a supervisory board meeting on Friday to approve the deal, according to people close to the situation. Exel board members are due to convene on Sunday to agree to the terms of the deal.
Deutsche Post is offering a mix of cash and shares that values Exel at around £12.40 a share – considered to be at the higher end of expectations. The shares component will be 25-30 per cent.
The German group is also proposing cost synergies of €200m ($244m) a year.
John Allan, chief executive of Exel, will be made head of the enhanced logistics division which will be run out of Bracknell in the UK. He has also been offered a place on the management board.
The deal reflects the German group's determination to expand internationally as the end of its monopoly in its domestic market looms in 2007.
It would give Deutsche Post a leading position in supply-chain management, known as contract logistics, and would be its largest acquisition ahead of its takeover of parcel group DHL.
Deutsche Post has been anxious to diversify away from its core postage and package businesses into a broader range of logistics services. It is already the world leader in air and sea freight.
The agreement of the deal could flush out counter-bidders, with UPS of the US considered the most likely suitor.
Analysts have suggested UPS' rival Federal Express might also be interested once Deutsche Post reveals its offer.
However, the price could alarm some investors such as DWS and Cominvest, two of the largest German fund managers, who have warned the group not to pay over £12. But the likelihood of a shareholder revolt is limited, not least because of the 45 per cent stake held by the government-run bank, KfW.
"In the end investors will probably put up with this deal. We are not likely to see another Deutsche Börse, although things could change if there is a counter bid," said a leading German shareholder.
Andrew Beh, analyst at ING, said: "Through this deal Deutsche Post will go from being number one in air freight and sea freight to being a much larger freight operator that is also number one in contract logistics.
"This is a radically consolidating industry and there is not much left of size to buy, particularly in contract logistics.
Deutsche Post to announce takeover deal for Exel Monday: report
Agence France-Presse English Wire 09-17-2005
LONDON, Sept 17 (AFP) – Deutsche Post, the semi-privatised German postal service, is expected on Monday to announce a takeover deal for Exel valuing the British logistics group at about 3.6 billion pounds (5.3 billion euros, 6.5 billion dollars), the Financial Times reported Saturday.
With this acquisition, Deutsche Post, Europe's biggest postal service, would become the world's No.1 logistics group.
The Bonn-based group would pay for the acquisition with a mix of cash and shares, with the cash component covering between 70-75 percent of the purchase price, the FT said, citing unnamed sources close to the matter.
The deal values Exel at about 12.40 pounds per share, at the higher end of expectations, it said.
Exel board members are scheduled to meet Sunday to agree to the terms of the deal, the financial newspaper said.
According to the preliminary agreement reached by the two groups, Exel boss John Allan would join the board of directors of Deutsche Post, where he would be in charge of logistic activities, the FT said.
