Deutsche Post Unit Close to Buying Airborne Ground Subsidiary

German package-delivery giant, Deutsche Post AG, said that it is in talks to purchase the ground network of Airborne Inc. through its DHL Worldwide Express Inc. unit, newspapers reported Monday.

Reports in the New York Times and Wall Street Journal, DHL Worldwide is seeking to buy Airborne Express’ ground delivery service as part of an effort to expand its market share in the United States.

Sources close to the deal told the Wall Street Journal that DHL will pay more than $1 billion for the unit and that the trucking firm would become a DHL unit and the Airborne airfreight operation would run as an independent publicly held company.

U.S. laws limit foreign ownership of U.S. airlines, the Journal said. Under those statutes, DHL is forbidden from owning more than 25% of any U.S. airline, the Times reported.

Analysts told the papers that the move is expected to draw criticism from United Parcel Service Inc. and FedEx Corp., who both hold considerably more of the package delivery market than DHL does in the United States. DHL is the world’s largest foreign overnight cargo carrier, the Times said.

Klaus Zumwinkel, Deutsche Post’s chief executive officer, told the Journal that the any criticism from UPS or FedEx is merely an attempt to maintain their positions in the U.S. market. In the United States, UPS and FedEx control 75% of the package delivery market, while Airborne – the No. 3 delivery company in the U.S. – only holds 6%, the Journal said.

The deal, which the Times said could be announced as soon as Tuesday, would make Airborne Inc. an airline-only overnight delivery service that would carry cargo from DHL and other companies.

DHL has been looking for several years to expand into the United States, executives told the Times.