Merger between Posten and Post Danmark

The agreement entails a merger between both companies into a combined company which will be jointly owned by the Swedish state, the Danish state, CVC and the employees. The merged company will have annual revenue of approximately SEK 45 billion and include over 50,000 employees.
 
Fritz H. Schur., currently Chairman of Post Danmark, will be appointed Chairman. Erik Olsson, currently the CEO of Posten, will assume the position as CEO of the merged company. The parent company will be Swedish and the headquarters will be located in Stockholm. The Swedish state together with the employees of Posten will own 60 percent of the merged company and the Danish state together with the employees of Post Danmark and CVC will own 40 percent. As part of the agreement, Posten will distribute an extraordinary dividend of SEK 1,400 million to the Swedish state. In all other respects, the influence of the owners is balanced in such a way that the Swedish state will have equal voting rights as the Danish state and CVC together.
 
The merged company will be organised along specialised business divisions, in a similar way as Posten has been organised since January 1, 2007. The traditional postal business in each respective country will be operated as national entities adhering to national regulations and using the same brands as today ("Posten" and "Post Danmark"). The logistics businesses will be joined under one division and under an own brand. The information logistics and graphical business will be joined under the Strålfors brand in the merged company. Beyond the four main businesses, the company will comprise group functions and one unit for shared services. Post Danmark's 25% ownership in De Post - La Poste (Belgium) will also be part of the merged company.
 
-          Both Posten and Post Danmark are well managed businesses. By establishing a merged company that acts on several markets offering a more competitive portfolio of services, we create a Nordic player with the right prerequisites to fulfill each respective service obligation with the quality we all expect. The enterprise customers in both countries will have access to a business partner with a larger capacity to accommodate increased requirements on communication and logistic solutions within, and outside, the Nordic area, says Fritz H. Schur the new Chairman of the merged company.
 
The postal and logistics markets are changing rapidly all across the world. When national postal markets are deregulated competition increases within the most attractive segments and sub-markets. Small, national players struggle to reach the needed volumes to compete with global players, especially relating to the ability to carry the increased costs when developing needed IT solutions. The deregulation decision taken by the EU will lead to consolidation of both traditional postal as well as logistic businesses.
 
The increasing internationalisation entails an increased demand of cross-border distribution solutions. Simultaneously, technological development leads to an increase in electronic communication which in turn means a decrease in mail volumes, so called electronic substitution. For businesses operating in small national markets, with limited financial strength and "reach", the need to cooperate with international partners increases - primarily within logistics but also within traditional postal operations.
 
The merger between Posten and Post Danmark provides significant value creating synergies for the merged company and its owners. In addition to cost synergies within IT, sourcing and administration/shared services, estimated to SEK 1 billion annually at full run-rate, there are expectations of significant operating and financial synergies within the business.
 
-          We operate on a market exposed to rapid change. The competition from international players increases when postal markets are deregulated and electronic communication challenges traditional mail operations. The merger between Posten and Post Danmark constitutes a proactive step in the right direction in order to meet these challenges. A combined company with strongly rooted national operations, creates the foundation for increased competitive strength across all business divisions, says Erik Olsson the new CEO of the merged company
 
The completion of the signed letter of intent is subject to required approvals by the parliaments in Sweden and Denmark respectively, signing of definitive agreements and completion of a so called due diligence. The merger is also dependent on approval by relevant regulatory authorities. The ambition is to complete the merger by the end of 2008.
 
SEB Enskilda has acted as Posten's financial advisor, while Nordea Corporate Finance has acted as Post Danmark's financial advisor in the transaction. Goldman Sachs International has acted as financial advisor to the Swedish government.
 
For more information, please contact:
Posten AB
Posten Media Relations, telephone: +46 8 23 10 10
 
Post Danmark A/S
Lars Kaspersen, Head of Communications, Telefone: +45 24 63 61 14
 
CVC Capital Partners
Peter Törnquist, Partner, CVC Capital Partners (Stockholm), telephone: +46 709 4933 73
Søren Vestergaard-Poulsen, Partner, CVC Capital Partners (Copenhagen), telephone: +45 2024 3336
Summary of letter of intent
The main terms in the letter of intent signed by the Swedish Ministry of Enterprise, Energy & Communications, The Danish Ministry of Transport and CVC regarding the merger between Posten AB and Post Danmark A/S, are summarized below
 
Strategy
The merged company's objective and strategy shall be to:
o        Strengthen a leading Pan-Nordic business operating four business divisions and one shared service unit:
- Post Danmark's Mail Division,
- Posten's Mail Division,
- Pan-Nordic Logistics Division,
- Information Logistics Division, and
- A shared service unit.
o        Maintain a leading position in Sweden and Denmark,
o        Expand and reinforce the CEP business in a Nordic and possibly Baltic perspective,
o        Further grow the Information Logistic business with a Nordic/North European business focus, and
o        Continue to fulfill the universal service obligation (USO) in relation to postal services in Sweden and Denmark,
         This should lead to achieving identified synergies, results and cash flow targets.
 
Relative ownership and voting rights
Relative ownership:
o        The Danish state/CVC                                                  38.8%
o        The Swedish state                                                        58.2%
o        The merged company's employees and management       3.0%
                                                                                            100.0%
         In order to achieve this division of the share capital, the Swedish state shall be entitled to receive SEK 1,400 million from Posten in the form of dividend
         Employees of Post Danmark shall have their current 3% ownership in Post Danmark converted to shares in the merged company. The Swedish state shall establish an ownership program for Posten employees equivalent to 3% ownership in Posten
 
Voting rights:
o        The Swedish state                                                       49.81%
o        The Danish state/CVC                                                49.81%
o        The merged company's employees and management      0.38%(1)
                                                                                          100.0%
 
Corporate Governance
         The Swedish state shall have the right to appoint 4 directors, the Danish state together with CVC 4 directors. In addition, the board of the merged company will consist of up to 3 employee representatives. The owners will support that employees representing both Posten and Post Danmark are appointed as employee representatives.
         The Chairman of the board shall be Fritz H. Schur and CEO shall be Erik Olsson, currently CEO of Posten
         The merged parent company will be Swedish with headquarters in Stockholm (Solna)
 
Future ownership
         The owners have agreed that the shareholders' agreement shall provide for mechanisms which govern the goal to broaden the shareholder base by seeking a future listing on OMX (Stockholm/Copenhagen) within 3-5 years.
 
Process
      The transaction is subject to the following conditions:
o        Due diligence
o        Approvals and decision by the Danish government/parliament, the Swedish government/parliament and CVC's investment committee
o        Signing of definitive shareholders' agreement and merger agreement
      The closing of the transaction is also subject to receipt of all required regulatory approvals
 
(1) If this division of voting rights is not possible due to rights of Post Danmark's employees through their current ownership, the division of voting rights should be; the Swedish state 48.1%,the Danish state/CVC 48.1% and to employees and management of the merged company 3.8%