January 24, 2008 / 7:29 PM / in 10 years

D.Post CEO wants to sell U.S. DHL business - paper

FRANKFURT, Jan 24 (Reuters) - Deutsche Post (DPWGn.DE) wants to sell its loss-making U.S. DHL business to rival Fedex (FDX.N) and talks are underway, the Financial Times Deutschland reported, quoting sources familiar with the matter.

Deutsche Post Chief Executive Klaus Zumwinkel “wants to leave the company in a clean condition” and is under pressure as he retires from his post in November, a manager at the German mail and logistics group was quoted as saying in a report to appear on Friday.

The firm wants to sell DHL at the latest by May, the newspaper added.

A Deutsche Post spokesman described the report as speculation. “We cannot comment on this,” he added.

FedEx spokesman Howard Clabo said: “We do not comment on rumours or speculation”.

Meanwhile, Deutsche Post Chief Financial Officer John Allan told the Frankfurter Allgemeine Zeitung newspaper that his company wanted to decrease its DHL business in the United States but did not want to sell it fully.

“Selling the domestic American business is very, very unlikely,” he was quoted as saying in a newspaper report also to appear on Friday.

The United States plays an important, strategic role in the international express delivery market for DHL and Deutsche Post does not want to abandon its important hub in that market, he said.

    But losses that the company has recorded in the United States until now are not acceptable any more, Allan said.

    Deutsche Post on Wednesday reported that it took a hit of about 600 million euros ($879.1 million) last year at its DHL unit as economic weakness and competition stalled its recovery.

    ING analysts wrote in a Thursday note that DHL “is likely to decide to keep but streamline its U.S. International Express business, but look for a strategic partner for its U.S. Domestic Express business. A partner could well be an asset-light freight forwarding company with a good track record of solid delivery, such as Expeditors.”

    Expeditors International of Washington Inc (EXPD.O) is a freight forwarder based in Seattle, Washington.

    The restructuring at Deutsche Post could also see its Postbank DPBGn.DE unit -- in which Deutsche Post owns a 50 percent stake plus one share -- being merged with another bank, the Financial Times Deutschland reported, adding that a merger may happen in the second half of the year.

    Zumwinkel said earlier this month that Postbank ought to remain in German hands if Deutsche Post decides to sell its stake. He said Deutsche Post was considering the future of the bank in 2008.

    Reporting by Rajiv Sekhri; editing by Elaine Hardcastle

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