Fitch takes Deutsche Post off negative watch

Fitch Ratings said it affirmed Deutsche Post AG's senior unsecured rating at A+ and removed it from Rating Watch negative, where it was placed on Sept. 2 following the company's initial bid for Exel plc. The short-term F1 rating is affirmed.

The outlook is negative.

This action follows the announcement by the company that it has successfully completed its acquisition of Exel plc.

The affirmation reflects the impact of the acquisition on Deutsche Post's credit profile, which has been limited by a partial payment (€1.5 billion) of the acquisition price in shares and asset disposals for another €1.5 billion, the agency said.

However, Fitch said it assigned the negative outlook to reflect little financial flexibility for further debt-funded acquisitions by a group that has repeatedly demonstrated an acquisition appetite and on-going operational difficulties for the US Express division. Furthermore, it will take time for the integration of Exel to complete.

Deutsche Post's ratings continue to be underpinned by the cash generative nature of the stable, regulated mail activities and its dominant contribution to group profits (at some 70% of corporate activities' pro-forma fiscal 2004 operating profit), the agency said.

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