Deutsche Post to Buy Air Express for $1.14 Billion Cash
The merger, which is subject to U.S. and European regulatory approval, has been approved by the boards of both Air Express and Deutsche Post.
Insiders said, if completed, the purchase would position state-owned Deutsche Post, Europe's biggest mail, parcel and logistics company, as a serious challenger to FDX Corp.'s Federal Express and United Parcel Service Inc. in the global air freight and express market.
Deutsche Post, which plans to finance the purchase with a bank loan, will integrate Air Express into its Switzerland-based Danzas Holding AG subsidiary, a freight forwarding unit, creating a unit with $7.4 billion in annual sales.
The new CEO of the combined Danzas-Air Express, to be called Danzas-AEI, will be Renato Chiavi, currently the head of Danzas' intercontinental business. Danzas' current CEO Guenter Rohrmann, has been named vice chairman of Danzas-AEI and oversee the units' integration.
The takeover is part of the consolidation in the air cargo market as bigger companies seek economies of scale. Over the past 18 months, Deutsche Post, which is seen as the most aggressive of the European post offices, has been buying up logistics and distribution companies across Europe.
With this merger, Deutsche Post will gain a strong position in the U.S. export and import market and in Europe and Asia as it seeks to bolster seamless services for clients. Analysts said the purchase is a good fit for Deutsche Post because it will enable the company to get a piece of the U.S. shipment market.
Air Express posted revenues of $1.5 billion last year, and the Deutsche Post group is expecting total sales of about $29.3 billion in 2000.