Deal Reporter
Dutch postal services company PostNL [AMS:PNL] is more likely to sell its international operations along country lines rather than in one bundle, a source and a banker following the situation said.
The buyer pools for the operations in Germany, the UK and Italy are likely to be limited by incumbent operators in each facing competitive restraints, the source said. This points to secondary domestic players, perhaps teaming up with private equity, as likely buyers.
PostNL announced a strategic review of its foreign operations on 6 May, due to concerns over local legislation and profits. The international division accounts for EUR 1.7bn of the group’s EUR 4.25bn revenues.
Options being considered include divestment of the operations in whole or in parts, keeping the activities and looking for partners, a PostNL spokesperson said. PostNL does “not exclude a bundled outcome including all or a selection of the operations,” the spokesperson said.
PostNL’s Italian operation Nexive has a 15% market share, behind incumbent Poste Italiane. German operation Postcon has 8% of the market behind Deutsche Post [ETR:DPW], and the UK’s Whistl has 26% behind Royal Mail [LON:RMG].
The diverging successes of the three countries might affect appetite for the respective units, the source said. For example, operations in the UK face greater regulatory uncertainty than in Germany, an industry consultant explained.
Whistl handles about a quarter of UK mail volumes, but relies on Royal Mail for final delivery, the consultant said. It shelved end-to-end delivery plans when JV talks with UK private equity firm LDC broke down at the end of April on the back of uncertainty over how the UK regulatory environment would allow this.
Postcon faces a similar problem in Germany, the consultant said. In Italy, government subsidies provided to Poste Italiane do not allow for an even playing field, he said. But at least Nexive operates more in the higher-margin delivery space, he added.
According to PostNL’s 2014 annual report, the International division’s revenues included EUR 797m from Whistl, EUR 488m from Postcon and EUR 237m from Nexive.
PostNL shares closed down 0.22%% at EUR 4.16 Wednesday, giving it a market capitalisation of EUR 1.84bn.