UPDATE 2-TNT Express sells Chinese delivery business

Thu Mar 28, 2013 7:54am EDT

By Gilbert Kreijger and Anthony Deutsch

AMSTERDAM, March 28 (Reuters) - Dutch delivery company TNT Express has sold Hoau, its Chinese parcel business, to private equity funds as it refocuses on core European activities after an unsuccessful takeover attempt by a U.S. rival.

TNT Express, the target of a failed 5.2 billion euro ($7 billion) acquisition bid by UPS, gave no financial details of the sale to funds managed by CITIC Private Equity.

Analysts estimated the network of 1,600 distribution depots, is worth roughly 70 million euros ($90 million).

The Dutch firm was forced to come up with a standalone strategy earlier this year after the European Commission, Europe's market regulator, blocked UPS's takeover offer in January because of competition concerns.

TNT Express said last month it would sell domestic operations in China and Brazil, to focus on international delivery services, to improve profitability after losses made in 2012 and 2011.

ING analyst Marc Zwartsenburg said investors would welcome the sale of loss-making parts of the business. "Now we're just waiting for Brazil and the sooner that happens the better," he said.

Hoau is one of China's leading domestic road distribution service providers and a leader in the express package delivery business, with about 1,500 depots, servicing more than 600 locations in the country.

TNT Express said it will continue to develop its international express delivery service to and from China where it has its own network of 36 depots.

Rabobank analyst Philip Scholte said it would be logical for TNT Express, which generates roughly two thirds of revenue in Europe to sell other operations outside the region.

"This raises questions about the logic of keeping other activities, such as in Australia, New Zealand, Taiwan and South East Asia," he said." If they are a pure-play European company, why keep those businesses?"

TNT Express said it expected the deal, which is subject to regulatory approval, to close in the second half of the year.

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