German Post Looks to Asia After DHL Acquisition
DHL International, headquartered in Brussels, Belgium, is the world's largest express service outside the US and claims a 40 percent non-US market share. It could be the battering ram for Deutsche Post's future expansion into Asia.
CEO Klaus Zumwinkel said as much at a press conference in Paris in mid-September.
"We are now in a position to offer our international clientele peak performance in the global express business," he said. He did not, however, mention any takeover target in the Asia Pacific region.
The Germans have few regional cornerstones, although they bought two small Australian companies earlier this year. But given their strong position in logistics and now express services, the way to Asian markets seems open.
DHL added an important component to the global delivery network that Deutsche Post began to build in the late 1990s through massive acquisitions in Europe and the US.
Danzas, a Swiss freight forwarder that the Germans bought in 1998, provided the logistics anchor. It is integrating an acquisition made last year -- Air Express International -- into the logistics division. Purchase of the postal bank adds a financial services dimension.
Zumwinkel's strategy is clear, the newspaper Die Welt noted last month: With 90 percent of the company's profits still dependent on letter mail and its monopoly position already eroding even before it is formally abolished, globalization was the only way to go.
Deutsche Post has been after DHL for most of the last decade, but it did not get an initial stake until 1998, when it bought 25 percent of the company. Since Lufthansa owned another 25 percent, this was close to German control.
But with the IPO due in November, Zumwinkel clearly thought he needed full ownership. He got a binding commitment from the family of DHL's founder and other institutional owners to sell him 26 percent of their 44 percent stake, giving him control.
Japan Airlines owns 6 percent, and DP is negotiating with JAL to acquire its share packet. DP already had made a deal with Lufthansa that put it in a managing position for Lufthansa's stake of 25 percent.
Through DHL International, Deutsche Post also will own a minority stake in the affiliated DHL Airways Inc., Redwood City, CA, which handles only US domestic traffic. But the Germans will not control the affiliate.
DHL's global network connects 80,000 sites in 228 countries, making it the world's largest. However, it does not come close to carrying the amount of traffic that UPS and Federal Express handle.
DHL sales last year totaled 4 billion euros ($3.46 billion), up 17 percent over 1998 totals, and they reportedly are rising at about the same rate this year.
No sales price was announced, but media speculation ranged from 2 billion euros ($1.8 billion), according to Die Welt, down to $600 million to $800 million, according to The Wall Street Journal.
Zumwinkel plans to keep DHL as a separate brand under its current management, comparing its global brand impact to that of Coke. He said a planned IPO for the privately held DHL would proceed as planned in 2002.
The new cash will allow DHL to continue plans for buying expensive new Boeing jets. Indeed, the Germans saw a chance to move on DHL once they learned about the planned purchases, pointing out that they could finance the new planes whereas other DHL shareholders could not.
As a result of the acquisition, Deutsche Post postponed its IPO from Nov. 6 to Nov. 20. DP had initially planned to float from 33 percent to 49 percent of its stock, but the government opted for a more modest 25 percent to 33 percent.