Post Office to buy foreign business

THE POST OFFICE will next week unveil its first major overseas expansion since being granted more commercial freedom by announcing the takeover of Germany's fourth-largest parcel operator.

The deal to acquire German Parcel, due to be announced on Monday, is said to be worth hundreds of millions of pounds. It will give the Post Office its first a presence in mainland Europe.

The move follows the Government's decision last month to lift controls on the Post Office's ability to borrow commercially and enter joint ventures with overseas partners. It was the last important policy decision by Peter Mandelson before he resigned as Secretary of State for Trade and Industry over the Geoffrey Robinson home loan affair.

A Post Office spokesman said the company would be making "the biggest announcement about the company since it was established as as corporation 30 years ago". He would not disclose details, but said it would be "good news for the company and all its customers and employees".

The organisation has pressed for more commercial freedom and a cut in the pounds 320m dividend it pays the Treasury in order to put it on an equal footing with rival international post offices. It served notice immediately after the Government review that it intended to push ahead with a number of projects to expand internationally, particularly in mainland Europe.

Germany's Deutsche Post recently bought a 50 per cent stake in Securicor's parcel delivery business and a 25 per cent stake in courier firm DHL International. The privatised Dutch post office, meanwhile, took over TNT last year.

The UK's Post Office has entered into two small joint ventures with private operators in Sweden, but until now it has been hamstrung by Treasury rules limiting investment in joint ventures with the private sector to pounds 10m.

The Government review in December ruled out privatisation of the Post Office or floating up to 49 per cent of it. But Mr Mandelson made it clear he intended to keep the privatisation option open. His successor at Trade and Industry, Stephen Byers, is another moderniser although he came from the Treasury, which tried to block easing of Post Office controls.