Swedish and Danish postal services to merge

Swedish and Danish postal services to merge
Image: Posten AB/Post Danmark
Sweden and Denmark will merge their postal services to create a new company, along with a private investment fund, that will be able to meet new challenges in a changing market, a statement said on Tuesday.

Sweden’s Enterprise Ministry and Denmark’s Transport Ministry, together with private equity and investment advisory firm CVC Capital Partners, signed a memorandum of understanding to merge the two services, Swedish service Posten said.

“The rationale is to meet the markets’ increasing challenges through the increased competitiveness of a merged company,” it said, pointing out that a recent European Union decision to deregulate the sector would increase “demand of cross-border distribution solutions.”

Tuesday’s deal opens the way for the creation of a new company counting around 50,000 employees with an annual turnover of some 45 billion Swedish kronor ($7.5 billion).

The Swedish state and its partners within Posten will own 60 percent of the new company, while Denmark and its partners in Post Danmark and CVC will hold a 40 percent share, the Posten statement said. The merger would create synergies within the IT, administration and shared services that should save the new company an estimated 1 billion kronor.

“We operate in a market exposed to rapid change. The competition from international players increases when postal markets are deregulated and electronic communication challenges traditional mail operations,” said Posten chief executive Erik Olsson, who was set to take the helm of the new company.

“A combined company with strongly rooted national operations creates the foundation for increased competitive strength across all business divisions,” he added in the Posten statement.

Fritz H. Schur, the current chairman of Post Danmark, was to be appointed chairman of the new group.

The new company will comprise two national entities maintaining the brand names of Posten and Post Danmark, which would adhere to national regulations, Posten said.

Logistics would be handled by a joint entity with its own, as yet undisclosed brand name, while IT, logistics and graphics would be handled jointly under the Staalfors brand name.

The joint corporations would also include a shared service division and would include Post Danmark’s 25-percent share holding in De Post/La Poste of Belgium, it added.

“A Nordic cooperation will secure the post delivery across the country going forward,” Swedish Enterprise Minister Maud Olofsson said in a separate statement.

“The cooperation will help meet increased competition, take new market share and give private customers and companies the international service they demand today. The company will also be of interest to future global partners,” she added.

Sweden’s postal market was deregulated in 1993 but Posten remains the largest mail delivery company and handles some 20 million letters and packages a day, to 4.5 million households and 900,000 companies. It has around 30,000 employees.

The European parliament agreed at the end of January to end all state monopolies in the bloc for letter delivery, effective from January 1, 2011.

Some 11 EU member states will get a two-year grace period.