Deutsche Post's DHL Announces Purchase of Airborne Unit

Deutsche Post AG's package-delivery unit, DHL, and Airborne Inc. announced that the German shipping giant will purchase Airborne’s ground operations for $1.05 billion.

The companies expect the deal, which is subject to regulatory approval, to be finished by summer 2003.

Under the terms of the purchase agreement DHL will pay $21.25 in cash for Airborne's assets, the companies said. The possible sale was first reported by news services Monday (Click here for related coverage.).

DHL said that the deal would “strengthen [its] presence in the United States,” and that its global reach through DHL’s existing global network.

The new U.S. company will operate under the DHL name, the companies said. Both firms said that the new combined delivery company would challenge shipping giants United Parcel Service Inc. and FedEx Corp.

“The UPS/FedEx duopoly has a 79% share of the U.S. express delivery market, and the combination of DHL and Airborne will enable us to create a much stronger competitor, which will benefit a broader range of express delivery customers," said Carl Donaway, chairman and chief executive officer of Airborne.

Airborne is currently the No. 3 overnight delivery company in the United States, trailing UPS and FedEx.

To avoid U.S. legal entanglements, Airborne’s air cargo unit will be separated from the trucking unit and operate as an independent company under the name ABX Air Inc., Airborne said.

ABX Air will be publicly traded and wholly owned by Airborne’s current shareholders, the company said.

The new airfreight company and DHL will “enter into arms-length commercial agreements that will govern their relationship, including an aircraft, crew, maintenance and insurance,” Airborne said.

By Sean McNally

I>Staff Reporter

(Click here for the full press release.)