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FedEx in talks to buy DHL stake

Posted by | Jan 25, 2008 | |

FedEx reportedly is in talks to buy all or part of Deutsche Post’s DHL delivery business in the U.S. in a deal that would help it challenge larger rival UPS.

Seeking to cut losses in the hyper-competitive domestic fast delivery business, Deutsche Post may move to trim its DHL business in the United States, without abandoning it completely, according to published reports on Friday.

Deutsche Post CFO John Allan was quoted by Frankfurter Allgemeine Zeitung, a German newspaper, that a total sale of DHL in the U.S. is “very, very unlikely.”

A deal could be in the works by May at the latest, according to the report.

Shares of FedEx rose 1.6% to end at USD89.96, bucking the move down in the overall market. UPS fell 1.8% to USD69.97.

A spokesman for Memphis-based FedEx didn’t return a phone call from MarketWatch.

Analyst Rick Paterson of UBS said FedEx doesn’t really need DHL’s U.S. delivery assets, and that it simply has to wait for it to lose ground over time to eventually win over its domestic market share.

FedEx, however, would benefit if DHL allowed it to become the U.S. distributor of its hefty package traffic originating in Europe and Asia, he said.

FedEx would have the edge in any talks because Deutsche Post is under pressure from shareholders to produce some kind of value for DHL.

A deal between DHL and UPS is less likely because of the “more contentious relationship” between the two giants overseas, he said.

One of the world’s largest delivery companies with 4,000 offices, DHL traces its roots to 1969 in the U.S. before being acquired by Deutsche Post in 2002.

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Deutsche Post studying restructuring

Posted by | Jan 25, 2008 | |

Deutsche Post is considering its options for retail bank Postbank and its loss-making DHL Express unit in the United States but has not reached any decisions, a source close to the supervisory board told Reuters on Friday.

“There are considerations, but no decisions yet,” the person said. A second source familiar with the matter confirmed this.

Deutsche Post is exploring ways to stem losses from DHL in the United States, where economic weakness has stalled its recovery as it tries to take on dominant domestic rivals UPS and FedEx.

The company said this week it would write down around 600 million euros (USD879 million) on the value of the business after previously abandoning a target to break even at DHL in the United States in 2009.

And Deutsche Post’s chief executive, Klaus Zumwinkel, has said the role of Postbank in the group could be considered following the deregulation of the German mail market at the start of 2008. Many banks are interested, Zumwinkel told analysts in November.
His comments have been taken as a signal in the market that the bank would be sold.

The Financial Times Deutschland said on Friday that Postbank would be merged with another bank and not sold, while Post is in talks with FedEx about the U.S. package delivery business.

Teaming up with FedEx in the domestic U.S. business whilst offering FedEx a joint venture in Europe to enable it to deepen its presence could be the “most elegant solution for the massive profitability problems of DHL in the U.S.”, ING analysts wrote.

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Polish Post Office to be modernised in five years

Posted by | Jan 24, 2008 | |

The Polish postal service is to be turned from state-owned enterprise into a sole shareholder company of the State Treasury, which would allow for further privatisation in the future.

“We have to change the Polish Post Office into a dynamic enterprise”, promises Maciej Jankowski, deputy minister of infrastructure, quoted on TVN24.

Jankowski has declared his intention talk to the Post Office management and trade unions to get full understanding of the company, currently the key Polish employer with nearly 100,000 employees. The state enterprise awaits privatisation and commercialization according to the minister.

Jankowski promises he will do his best to have the new commercialization act passed through the Parliament and implemented in mid 2008.

Under the new law, the Polish Post Office would be transformed from a state-owned enterprise into a sole shareholder company of the State Treasury, which would allow for further privatisation of the entity.

The government’s preliminary plan assumes that part of the shares in Post Office will be floated on the stock exchange, but the state would retain its majority package in order to maintain control of the enterprise.

Deputy infrastructure minister informs, however, that the floatation should not be expected before 2010”.

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DHL demands USD 93 Million from ABX

Posted by | Jan 24, 2008 | |

The tempestuous relationship between DHL and ABX Air turned even testier Jan. 14 when DHL demanded ABX prepay a USD 93 million note issued as part of the DHL spin-off of the air line in 2003, ABX reported to the Securities and Exchange Commission.

DHL says the recent USD 350 million ABX acquisition of Cargo Holdings International constitutes a “change of control” of ABX under terms of the note. ABX says the purchase resulted in no change of control.

Anticipating possible problems with the note, ABX Air had made arrangements to borrow up to USD 61 million from certain former significant CHI shareholders if the acquisition prompted DHL to demand ABX to prepay the note.

ABX also entered a USD 345 million credit agreement related to the CHI deal that should prevent a default of the note due to the DHL prepayment request, the airline reported. The company has requested an extension of period for meeting the agreement requirements to 15 days from the current five.

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UK Pallets multi million pound investment to support pallet growth

Posted by | Jan 24, 2008 | |

UK Pallets is undertaking a multi million pound investment programme to cater for the continued growth across its network. Having seen significant year on year growth, the pallet network operator is expecting this to continue for the foreseeable future and is predicting to grow its business by more than 10 per cent during 2007, and similar levels of growth are projected for each of the next three years. As a result, UK Pallets is investing heavily in its existing infrastructure to expand its fleet, warehousing, IT and network capability.

As part of the programme, UK Pallets commenced an extensive fleet renewal process with the delivery this month of 30 brand new Scania trucks. The 30 trucks comprise of 13 tractor units and 17 18-tonne rigids with curtainsider bodies and tail-lifts. These vehicles will replace and augment UK Pallets existing distribution fleet, providing enhanced performance, efficiency and environmental benefits.

UK Pallets is also adding further capacity at its 140,000 sq ft national hub near Lichfield to handle increased throughput. An additional 70,000 sq ft of warehousing space is being planned for the site, which currently handles an average of over 5,500 pallets per night, with completion of the extension scheduled for the first half of 2008.

In recent months, UK Pallets has also experienced extensive expansion to its network infrastructure, with the introduction of eleven new member organisations. This enlargement – bringing the total number of members to 72 – will provide increased reach across the UK with added coverage in Wales, Lancashire and the south east of England. Network growth forms a key aspect of the company’s strategy moving forward and further members are expected to be added during the next twelve months.

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