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In& killia4IMi Chris Morgan, Automotive & Logistics Datamonitor Although both
Page 22
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parties insist there is no certainty as to the outcome of the talks, a potential takeover bid for Exel seems a logical move for Deutsche Post, as it would fit well with the German giants strategy of becoming the number one global logistics company.
A deal between the two would be unlikely to raise any regulatory issues. Exel has a dominant position in the UK market, but its Continental operations are too small to cause a problem for any European bidders.
The acquisition would dramatically increase the critical mass of DHL, Deutsche Post's logistics unit, which is ranked fifth globally in contract logistics, behind Exel —the world leader. Furthermore, it would dilute its exposure to its domestic package market, which accounts for almost 75% of sales.
Its logistics business unit, by way of comparison, contributes only 17% of the company's revenue, though it managed a 12% year-on-year revenue increase in the f irst half of this year.
Deutsche Post has been attempting to expand outside its domestic arena for some time, in preparation for the forthcoming liberalisation of the European postal market.
The acquisitions of Danzas, DHL, Airborne and Blue Dart have allowed it to expand in the US and the Far East. Buying Exel would further increase the services it could offer Given Exel's lead in the contract logistics market, its price tag is likely to be high. But Deutsche Post might feel that a premium is worth paying to become the world's largest logistics company.