Herna Verhagen, PostNL’s CEO, said: “This is a key strategic step towards a robust and stable mail business. We are very aware of the responsibility that comes with our leading position in the postal market, which means that we will continue to carefully weigh the interests of all stakeholders to help us create both financial and social value. The consolidation will bring greater quality and continuity to senders and consumers, and enhance job security for our postal deliverers. We’ll be continuing our existing price policies of the past few years.”
Ronald van de Laar, Managing Director of Sandd Holding, commented: “Looking back on two decades of Sandd, I can only say that I’m extremely proud of and grateful for what we’ve achieved together. That said, the time has now come for a single, robust Dutch postal network that offers consumers, businesses and our workforce the best long-term solution. We have agreed a solid way forward for the integration of our networks and for the future of our people.”
PostNL and Sandd announced they were looking to join forces on 25 February 2019. When the Authority for Consumers and Markets (ACM) ruled on 5 September that it would not grant a licence, PostNL and Sandd invoked Article 47 of Dutch competition law to urge the Deputy Minister of Economic Affairs and Climate Policy to decide otherwise. On 27 September she decided to grant permission on the basis of significant public interest, subject to a number of conditions.
With these two networks combined, both businesses and consumers will have the security of a postal service that meets high quality requirements and remains affordable and accessible across the Netherlands.
The consolidation also provides greater job security for thousands of postal deliverers and will help cushion the decline of the postal market in a socially responsible way. For one thing, Sandd’s postal deliverers will all be offered jobs with PostNL, while PostNL will find alternative positions within the company for other Sandd people, or look for alternative solutions.
PostNL will also continue collaboration with sheltered workplace companies. As a result, the consolidation will not affect employees who face challenges in the labour market. PostNL has drawn up a solid plan to help it complete the integration of both networks in the first six months of 2020. Over the next couple of months, it will consult with Sandd customers to gradually absorb their volumes into the PostNL network, with the bulk of the migration scheduled to take place at the beginning of 2020. Once the integration is completed, Sandd’s brand and stamps will be discontinued.
Sustainable value creation
On 25 February 2019, PostNL published the transaction’s outlines and expected financial consequences. Since this announcement, PostNL made the business case more robust and developed a solid integration plan. The 27 September decision has created clarity on the conditions – access, returns and workforce – set by the Deputy Minister of Economic Affairs and Climate Policyfor the consolidation to go ahead. The key elements of the transaction are:
- Cash consideration of €105m at closing (including redemption of shareholder loans) and assumption of circa €25m in other liabilities by PostNL
- Annual underlying cash operating income (UCOI) contribution* synergies of €50m - €60m, reaching full run-rate in 2022
- Integration-related cash-out of approximately 1x run-rate synergies, equally split over 2019 and 2020; one-off costs (non-cash) related to accelerated depreciation in 2019 and 2020
- Delay in implementation of current cost savings plans will impact result by €(30)m - €(50)m (cumulative) in period 2019 – 2022 (25 February 2019: €(50)m - €(70)m)
- Expected negative UCOI impact in 2019 is expected to be between €(15) million and €(25) million
- Positive contribution to UCOI in 2020
Funding and dividend
We are PostNL, the mail and logistics solutions provider for all. We have been delivering special moments for over 220 years and aim to be our customers’ favourite deliverer by making it as easy as possible for them to send and receive parcels and letters. We constantly offer new services by combining state-of-the-art logistics, digital applications and the right communications channels. And every day we’re looking to do things even better – from apps to digital stamp codes, to sustainable transport and city logistics. On weekdays, we deliver an average 800,000 parcels and 7 million letters across the Benelux region, and our 38,000 people are right at the heart of society.
PostNL NV is a listed company with revenues of €2.8 billion in 2018, 48% of which derived from e-commerce.