PostNL today announced it will buy private competitor Sandd for €130 million ‘to form one strong national postal network for the Netherlands’ as mail volumes continue to shrink rapidly.
The deal, which requires regulatory approval, was widely expected after the Dutch government signalled last year it would permit market consolidation back to one dominant player given the dramatic decline of the traditional postal market. Addressed mail volumes are dropping by about 10% a year in the Netherlands.
The two companies said in a joint press release that the merger of their postal networks into one consolidated Dutch mail delivery operation would generate economies of scale and thus “ensure that postal services throughout the Netherlands continue to be reliable, accessible and affordable” for both companies and consumers.
PostNL delivers about twice as many letters as Sandd in volume terms but has far higher mail revenues. The former state-owned market leader, with Dutch mail revenues of nearly €1.7 billion last year, has some 18,000 mail delivery workers who delivered nearly 1.8 billion letters in 2018. Sandd, with revenues of only €201 million, has 16,000 part-time mail deliverers who last year delivered 720 million items on Tuesdays and Fridays under a twice-weekly delivery model.
PostNL will offer to take on all the Sandd delivery workers. The two companies said their works council support the deal and they would inform employees about the plan today. In parallel, they will officially inform the Dutch postal regulator, the Netherlands Authority for Consumers & Markets (ACM), thus setting the approval process in motion.
The companies noted that the Dutch economics minister has the right to over-rule the ACM should it reject the deal. The economics minister, Mona Keijzer, already told Dutch MPs last year that in view of the declining mail market consolidation between PostNL and Sandd was the only option to safeguard continuity of postal services for Dutch society.
PostNL CEO Herna Verhagen explained: “This proposed transaction will secure the foundation for a sustainable postal service in the Netherlands. Combining the two national postal networks is of vital importance for the postal market in the Netherlands to remain reliable, affordable, innovative and accessible for everyone. It will also serve increased long-term employment security for mail deliverers. This has always been an important objective of our efforts.”
Ronald van de Laar, managing director of Sandd Holding, added: “I am very proud of what has been achieved by my colleagues following the liberalisation of the postal market. In responding to the ever-decreasing mail volumes in the Netherlands caused by digitalisation, we need to be realistic.
“For this reason, opting for one strong national postal network is the best long-term solution for the consumer, the business sector and for employees. It is the only solution if we are to guarantee the continuity of the postal service in the Netherlands. Issues affecting the integration of our networks and our employees will also be carefully discussed between us. The sooner we receive the necessary approval, the better it will be for all parties involved.”
PostNL said the merger is expected to generate annual cost savings of about €50 million to €60 million from synergies to be realised by combining the networks into one network, and due to the operational synergies that will result from combining central functions and optimising the sorting processes. The company will continue with its ongoing cost-saving plans but slow down some of them due to the consolidation.
