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Dutch-British Postal JV Set to Go Live

NEW ORLEANS — The British and Dutch post offices will have a 10 percent market share in the US when the joint venture among Royal Mail, TNT International Mail and Singapore Post becomes operational at year's end.

Stephen Davie, Royal Mail's director of international communications, said at the DMA's annual conference here that the as-yet-unnamed JV would rank second behind the USPS in delivery of overseas mail.

“We'll be ahead of Deutsche Post by a long way,” he said. “They bought market share when they acquired Global Mail, Yellowstone and several other US companies. We built market share organically.”

Not surprisingly, Deutsche Post, which is preparing for an IPO on Nov. 20, demurred. “We are the largest cross-border mail business in the US after [the] USPS,” said Don Brooks, a Canadian who is managing director at Deutsche Post Global Mail, the company's international arm.

The British and the Dutch submitted the necessary documentation to the European Commission's Merger Task Force on Oct. 9. They expect approval by the end of this month. The EU's okay is mandatory.

The commission, Davie said, needed a “statutory” period of time “to take a technical view of our competitors and to notify all other posts to see if they have any objections. We expect some, but none that can stop the JV.”

He said that only a finding that the merger was anti-competitive or had monopoly characteristics could be a real obstacle. The JV's legal team, he added, had dotted all the i's and crossed all the t's to make sure that would not happen.

The Germans would probably object, but their objection is unlikely to stick, given that the EC is investigating DP for a series of alleged violations of European postal practices.

A management team headed by veteran Dutch postal executive Theo Jongsma is already in place and is setting up a “lean” headquarters operation in Brussels, Belgium, with a couple dozen people. “I don't want overhead at the center,” Jongsma said.

David Walker, president of Royal Mail USA, will head the JV's North American operations. Synergies, Davie said, were important. Royal Mail has infrastructure such as call centers, and the Dutch have an operational network here.

The new company will have a staff of 1,500 worldwide, with 300 in sales and marketing, and a global turnover volume from existing business of $500 million when it starts. Davie said no investment figures were available.

“It is difficult to quantify the investment, because much of it is asset-based — people, networks and operations.” Not much promotion is planned beyond telling existing customers of the change.

For now, the old brands are being kept since they are well known in Europe, the US and Asia. Indeed, that combine is part of the strategy behind the JV.

“International mail is a volume-driven business that can be moved through an alternate delivery system at the right price,” Davie said. “Royal Mail provides the volume, TNT International has developed the networks, and Singapore Post gives it an Asian presence.”

Postal liberalization, Davie added, is opening up global markets and allowing for the establishment of alternate delivery systems that eventually could handle domestic mail in competition with national postal administrations.

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