Deutsche Post to acquire Exel

Europe’s biggest post office, Deutsche Post, announced on Monday that its board and the board of Exel had agreed over the weekend that the German group will acquire the UK logistics company for around £3.7 billion ($6.7 billion).

The offer, a combination of cash and shares, puts a value of around £12.40 per share on Exel. The deal will create the world’s largest logistics group, employing about 500,000. It is not known whether UPS, which was also seen as a possible bidder for the UK company, will make a counter-bid, and some analysts have suggested that Federal Express might also be interested in jumping into the fray.

Deutsche Post, already the largest air and sea freight carrier in the world, has been looking to diversify from its core businesses of postage and packaging and into a broader variety of services. The biggest obstacle to the deal might come from some large investors, who have warned that Deutsche Post should not pay more than £12 per share for Exel. However, most analysts see an investor uprising against the deal as unlikely.

There is worry among analysts, though, that Exel’s pre-tax margin, at 2.2 percent in the first half, is substantially smaller than Deutsche Post’s 7.7 percent operating margin.

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