NZ Post considers sale of Coverga unit in Australia

NZ Post considers sale of Australia-based Converga unit after approaches

By Suze Metherell

June 15 (BusinessDesk) - New Zealand Post is considering the sale of its mail and record management outsourcing unit, Converga, and has hired 333 Capital to help with the potential exit of its last peripheral Australian business.

The state owned mail operator hired the consulting firm after receiving a number of approaches from possible buyers, NZ Post chief financial officer David Walsh told BusinessDesk. A possible sale had been announced internally, he said.

"We're not in a fire sale, we're doing this only if it values up well," Walsh said. "One thing to make clear, we haven't made a final decision to sell, but it is going to be heavily dependent on price and the strength of the partner buying."

NZ Post is looking to pare back traditional letter-delivery services, moving to alternate day delivery for standard letters in urban areas from July and shutting dedicated shops in favour of agency and kiosk services. The company is two years into a five-year transformation plan.

The SOE took a stake in Converga in 2004, when it was known as Outsource Australia, before taking full control in 2007. Last year it added Speedscan to the business.

"This is a case around New Zealand Post continuing to focus on its core business and letting the sort-of subsidiary businesses be given the opportunity to partner up with other potential buyers, and therefore present some cash back into our business as we reinvest it to keep providing good service," Walsh said.

NZ Post employed 333 Capital last July to manage the sale of its Australian courier business, Couriers Please, which was sold to Singapore Post for A$95 million in December. Walsh didn't name possible buyers for Converga, or give a sale price.

"The logical partner would be a trade buyer, but it doesn't mean to say your equity buyers wouldn't bid, but it's more probable that it’s someone who's got this sort of capability and wants to expand their business," Walsh said. "333 have put out some flyers to potential buyers already and we'll probably go out with a more formal information memorandum in the next two or three weeks. When we see the quality of the offers we'll make a determination of whether it's the right thing to keep or sell."

In the six months ended Dec. 31, NZ Post wrote down the value of its investment in Converga by $23 million to $26 million after the business lost a major customer.

(BusinessDesk)

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