TNT Post to be split off, boss confirms

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The uncertainty surrounding the future of the Netherlands’ main post company appears to have abated with mail and express delivery giant TNT revealing plans to spin it off.

In a conference call chief executive Peter Bakker said the entire mail unit could be separated this year and an initial public offering or partnership might happen after this process.

According to its website, Hague-based TNT Post collects, sorts, transports and delivers over 23.00 million letters, direct mail items and packages every day. It has sister companies in Germany, the UK, Italy and across central and eastern Europe.

ING analyst Axel Funhoff, who values the mail unit at between EUR 3.00 billion and EUR 3.50 billion, told Reuters: "They could try an initial public offering for mail, but they would have to give a good dividend yield, I think, of around 5.0 per cent.”

“They could fetch more if they sold to private equity," he added.

At the end of last year TNT revealed a new five-year strategy to focus on global express delivery.

It controls just 18.0 per cent of the express market compared to 85.7 per cent for worldwide mail.

The Hoofddorp-based freight company hopes to expand in online payments and has targeted South America and China as particular areas of interest because of the first-mover competitive advantages they offer.

Its five-year plan will involve divesting European mail assets and TNT initially hinted in December it might exit its post business in the Netherlands, which is described as being in “sharp decline”.

TNT’s domestic market activities generated EUR 3.50 billion in sales in 2009, accounting for around a third of the year’s EUR 10.43 billion revenue.

Cited by Reuters, Bakker said: "Structurally, post is in decline and that poses challenges."

He denied claims of investor activism but did acknowledge “there are, of course, shareholders who have made their views known”.

Confirmation that the mail and express units would be separated sparked rumours involving the latter as a takeover target.

Shares in TNT finished 5.6 per cent higher yesterday.