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FedEx in talks to buy DHL operations in US: reports

FedEx Corp is reportedly in talks to buy all or part of Deutsche Post AG's DHL delivery business in the US, a deal that would help it challenge larger rival United Parcel Service Inc (UPS).

Seeking to cut losses in the hyper-competitive domestic fast-delivery business, Deutsche Post may move to trim its DHL business in the US without abandoning it completely, according to published reports on Friday.

Deutsche Post chief financial officer John Allan was quoted by the Frankfurter Allgemeine Zeitung as saying that a total sale of DHL in the US is "very, very unlikely."

A deal could be in the works by May at the latest, according to the report.

A FedEx spokesperson declined comment.

"We don't comment on corporate development," FedEx spokesman Jess Bunn said.

A DHL spokesman denied any plans by parent company Deutsche Post to sell its US delivery service.

"There is no question about our exiting the US business, a withdrawal can be completely ruled out," DHL spokesman Jonathan Baker told the Memphis Business Journal.

Shares of FedEx rose US$1.45, or 1.64 percent, to US$89.96, bucking the move down in the overall market.

UPS fell US$1.25, or 1.76 percent, to US$69.97.

Analyst Rick Paterson of UBS said FedEx does not really need DHL's US delivery assets, and that it simply has to wait for it to lose ground over time to eventually win over its domestic market share.

FedEx, however, would benefit if DHL allowed it to become the US distributor of its hefty package traffic originating in Europe and Asia, he said.

FedEx would have the edge in any talks because Deutsche Post is under pressure from shareholders to produce some kind of value for DHL.

A deal between DHL and UPS is less likely because of the "more contentious relationship" between the two giants overseas, Paterson said.
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