Deutsche Post to bid for Exel

Deutsche Post, Europe's biggest mail service group, is today expected to formally launch an agreed £3.6 billion ($9.2 billion) takeover offer for the logistics company Exel.

The board of London-listed Exel met yesterday to give final approval to the deal, which will see the company's chief executive John Allan become head of logistics at Deutsche Post.

The current holder of that position, Frank Appel, who came into Deutsche Post through its previous acquisition if DHL, will be moved to become head of corporate services.

There is speculation that a formal offer from the German company may set off a bidding war for Exel, with the US players UPS and Federal Express seen as the most likely counter-bidders.

The Deutsche Post deal is likely to value Exel at some £12.40 ($31.90) a share or slightly more, a level that has concerned some of the German group's shareholders.

However, the 45 per cent stake held by a state-run bank means that a shareholder revolt, such as that seen in similar circumstances at Deutsche Borse, is unlikely.

The Bonn-based predator plans to pay around 28 per cent of the purchase price in shares, to pull off its biggest acquisition. It hopes to realise synergy savings from an Exel deal of 150 million euros to 200 million.

The European Commission, not Germany's cartel office, would have to approve the purchase.

In 2003, Exel, which employs more than 90,000 people, had a 2.7 per cent market share of the 148 billion market for logistics.

Deutsche Post subsidiary DHL Solutions had a share of around 1.1 per cent. The deal would create the world's biggest logistics group.

The British company beefed up its business last year through the purchase of the haulier Tibbett & Britten.

In recent years Deutsche Post has spent some £4 billion on acquisitions, ahead of losing its monopoly on German mail delivery in 2007.

For the first half of this year, Exel has reported turnover up 45 per cent at £3.6bn, while underlying pre-tax profit grew to £81.8m, from £57.8m in the previous year.

- INDEPENDENT