The U.K. Royal Mail has reportedly rejected overtures from the likes of FedEx, UPS and TNT seeking to acquire its General Logistics Systems (GLS) European parcel service. The government is “under pressure to plug a £4 billion ($7 billion) gap in its pension fund,” according to Transport Intelligence and it is considering options including selling GLS. The parcels unit could bring £1 billion ($1.7 billion), but its management is resisting the suggestion because the unit has been profitable and growing.
Fred Smith, CEO of FedEx, has been quoted saying FedEx is in no hurry to enter the European contract logistics market through an acquisition. Earlier in the year, UPS and FedEx had been named as possible suitors for Exel. Deutsche Post World Net (DPWN) later announced it would acquire Exel, but the price dampened prospects of a bidding war for the U.K.-based third party logistics company. This left speculators to suggest FedEx might be looking at TNT.
Smith reportedly said FedEx would be willing to spend $5 billion to $6 billion for an acquisition, but expressed the view the proliferation of restrictive regulations and social obligations of employers limits investment potential in Europe.
In other E.U. regulatory news, a joint statement by U.S. and E.U. negotiators said both sides had made “substantial progress” in open skies talks. The discussions to liberalize rules governing trans-Atlantic air service broke down in June 2004, but recent talks yielded progress on issues related to converging markets, competition, government subsidies and security. Market access and traffic rights are at the top of the agenda for the next round of talks.