Bpost Ends Negotiations for Takeover of Netherlands’ PostNL

  • Announcement comes after speculation that deal was imminent
  • Bpost spokesman says decision won’t affect company’s goals

Bpost SA , Belgium’s main mail carrier, and Dutch counterpart PostNL NV said they failed to agree on terms for combining, a surprise announcement following speculation of an imminent merger.

The decision followed several weeks of talks, including an “in-depth discussion” over the weekend, Baudouin de Hepcee, a spokesman at Brussels-based Bpost, said by phone on Monday. The two sides ended negotiations after finding they couldn’t agree on a number of points, he said, declining to elaborate.

Bpost has been expanding beyond mail delivery as it deals with declining demand for handling letters as customers shift to e-mail. It agreed in February to buy Belgian outlets of publisher Lagardere SCA’s train-station and airport bookshop unit, and Le Soir newspaper reported last week that it was interested in acquiring The Hague-based PostNL. The Dutch company’s shares jumped to the highest in 10 months on Monday following the announcement that talks had collapsed, while Bpost fell the most since early February.

“We would not be surprised that this is not the end of the story,” Marc Zwartsenburg, an Amsterdam-based analyst at ING Groep NV, wrote in a report to clients. Even though savings would be limited in mail deliveries because of their local focus, “there are several arguments” in favor of a merger, including the benefits of combining sorting centers and parcel operations, particularly in Belgium’s Flanders region, where they compete.

Tanno Massar, a PostNL spokesman, declined to comment beyond the company’s statement Sunday that talks had halted. Bpost spokesman de Hepcee also declined to comment.

Bpost dropped as much as 3.3 percent and was trading down 1.3 percent at 24 euros as of 12:01 p.m. in Brussels, valuing the company at 4.8 billion euros ($5.35 billion). PostNL jumped as much as 8.9 percent to 4.20 euros, the highest intraday price since Aug. 3, and was trading up 3.8 percent in Amsterdam. Both companies’ shares were suspended Friday pending an announcement following the media reports of talks.

The Belgian company, which is forecasting that domestic mail volume will drop as much as 6 percent this year, is planning to match last year’s recurring earnings before interest, taxes, depreciation and amortization and maintain its dividend. That compares with PostNL’s prediction of Dutch addressed-mail deliveries shrinking 7 percent to 9 percent annually through 2017 following an 11 percent plunge last year.

PostNL was the subject of takeover speculation late last year, when the Daily Mail newspaper in the U.K. reported London-based Royal Mail Plc and German competitor Deutsche Post AG were interested in the Dutch company. Postal-industry deals in recent years have focused primarily on more profitable express- and package-delivery services. PostNL spun off its TNT Express NV division in 2011, and Memphis, Tennessee-based FedEx Corp. acquired the business on May 25 for 4.4 billion euros.

Against Grain

Another acquisition by Bpost would have gone against the grain of the postal industry at the moment, said Andre Mulder, an Amsterdam-based analyst with Kepler Cheuvreux. Most companies in the industry have retreated from international expansion in the past decade, he said. While initially a deal could have worked out, “with synergies hard to achieve and PostNL’s results under pressure, the longer-term rewards could be more doubtful,” Mulder wrote in a note. He said Bpost would be better off buying back its own shares instead.

The Belgian state owns 51 percent of Bpost’s stock. Deputy Prime Minister Alexander De Croo on Friday denied a suggestion that the government intends to sell part of its holding. PostNL was formerly the Netherlands’ government-owned mail carrier.

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