Germany’s Deutsche Post has approached logistics company Exel about a possible takeover that analysts estimated could cost the German firm more than 5 billion euros (3.4 billion pounds). The news sent shares in the British group (EXL.L: Quote, Profile, Research) soaring as much as 17 percent to value it at 3.45 billion pounds, while Deutsche Post shares dropped as much as 4.2 percent amid concerns it may overpay.

The companies said in separate statements on Thursday that talks were in an early phase and that no decision had yet been made. “Deutsche Post AG has approached Exel Plc with respect to a possible offer,” Deutsche Post said. “Discussions are at a preliminary stage and there can be no certainty as to their outcome.” Officials at the two companies declined to comment further.

Shares in Exel were up 15 percent at 1,158 pence at 12:20 p.m., making it the top blue-chip gainer on the FTSE 100 index. Deutsche Post stock was down 3.5 percent at 19.72 euros, making it the leading decliner on the German blue-chip DAX index.

Exel, which provides global freight delivery and storage services, has beefed up its business and last year became the world’s largest contract logistics firm when it bought haulier Tibbett & Britten for 328 million pounds. Deutsche Post, which has a market value of about 23 billion euros, is expanding its DHL express courier and logistics business and its mail business abroad in order to reduce its dependence on the domestic German postal market, where its monopoly is due to expire at the end of 2007. Exel would bring Deutsche Post’s DHL division greater scale and give it clear market leadership.

Exel has long been the target of takeover talk given its small size relative to giant competitors such as Deutsche Post. U.S. rivals UPS and FedEx Corp., Dutch group TPG, Swiss firm Kuehne & Nagel and U.S. giant General Electric Co. have all been named in the past as potential bidders. Deutsche Post had repeatedly declined to comment on rumours about Exel. Kuehne & Nagel said on Thursday it would not bid for the UK company.

Source: Reuters

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