DHL buys out remaining share of Sinotrans-Exel JV in China

Filed in archive merger and acquisition on December 22, 2007

Express service and logistics provider DHL said last week that it has officially completed an arrangement with with Sinotrans (Sinotrans Air Transportation Development Co Ltd) for its parent company Deutsche Post World Net (DPWN) to purchase the remaining 50 percent share of the Sinotrans-Exel JV (joint venture) in China, which was formed in 1996.

According to Logistics Management Magazine, news of this deal possibly happening were reported in June, when it was reported that DHL had expressed interest in bidding for a 50 percent stake in Exel-Sinotrans freight forwarding Co Ltd, a joint venture between Exel LLC, an affiliate of Deutsche Post. DHL's President of Greater China and South Korea, Jerry Tsu said in the report that DHL was in talks with Sinotrans at the time, but that there was no progress to report at the time.

The new wholly owned foreign entity (WOFE) will "facilitate the continued integration of the heritage Exel and DHL business units under the DHL Logistics brand in China, creating greater business synergies and providing enhanced customer benefits while driving economies of scale," according to a DHL statement.

Evan Armstrong, president of Armstrong & Associates Inc., a supply chain consultancy in Stoughton, Wis., described this move as one of many that Deutsche Post World Net and DHL Logistics has taken to tap the growing potential of the rapidly expanding domestic Chinese economy.