fbpx

SingPost may exit US e-commerce business started during ex-CEO Wolfgang Baier’s time

Bloomberg reported yesterday (13 Mar) that SingPost is likely to wind down or sell its loss-making US e-commerce business after conducting a strategic review, according to a Bloomberg survey.

The poll was conducted after SingPost said last month it saw an impairment risk to the book value of its US e-commerce business. The company is now conducting a review of the business which is “expected to remain loss-making in the current financial year,” SingPost told Bloomberg last month.

SingPost bought majority stakes in U.S. e-commerce companies TradeGlobal Holdings Inc. and Jagged Peak for about US$184 million in Oct 2015. However, they have been a drag on SingPost’s profit for the last 3 years, causing SingPost’s market value to dive by half since its record high in February 2015.

An analyst told Bloomberg, “Sentiment has been overwhelmed due to the loss-making online business even as management reversed the structural decline in Post and Parcel segment.”

He added, “U.S. e-commerce strategy comes at a heavy price and would be costly to execute a turnaround. It has weighed on valuations and business outlook.”

US e-commerce units acquired under Mr Wolfgang Baier’s watch

The US e-commerce units were acquired during the period when “foreign talent” Wolfgang Baier was running SingPost. He was originally hired as a consultant helping SingPost to revamp its business but ended up as SingPost’s CEO in 2011.

At the time when TradeGlobal was acquired in Oct 2015, Baier said in an interview that the acquisition will turn SingPost into a global e-commerce player. “It is connecting the dots to become a digital company. We are a global player,” he told ST.

In another interview with Nikkei Asian Review, he said entering the US will allow SingPost to “cover two-thirds of the global e-commerce market” and position the company as “one of the global leaders in e-commerce logistics.”

Then two months later in Dec 2015, he tendered his resignation from SingPost due to “personal reasons” but stayed on for a few more months to help in the handover.

In May 2016, it was reported (‘Wolfgang Baier cashes out part of SingPost stake‘) that Baier started selling his shares in SingPost. In one sale, he sold off 2.5 million shares for about S$3.9 million in total.

Board director Michael Murphy who plays a major role in SingPost’s acquisition of US e-commerce units also resigns

When Baier tendered his resignation, then Chairman of SingPost Lim Ho Kee praised him, “The Board appreciates and thanks Wolfgang for his leadership and role in accelerating SingPost’s transformation. Under Wolfgang’s leadership and great team effort, SingPost has been established as a regional leader in eCommerce logistics business, with a strong focus on digitising our business.”

In the same resignation announcement of Baier, Lim also revealed that a board director of SingPost, Mr Michael Murphy, had played a major role in SingPost’s acquisitions of TradeGlobal Inc and Jagged Peak.

“Additionally, Board Director, Mr Michael Murphy, with his vast and deep US experience, has played a major role in SingPost’s recent acquisitions of TradeGlobal Inc and Jagged Peak in the USA, and will continue to oversee the integration of these acquisitions as SingPost leapfrogs into global eCommerce logistics,” said Lim.

Further online checks reveal that Michael Murphy has also resigned. In a SGX filing, it said that he resigned on 23 Feb 2017. In other words, barely less than 1.5 years after the acquisition of those US e-commerce companies which Murphy had helped SingPost to acquire, instead of assisting SingPost to “leapfrog into global eCommerce logistics”, he also resigned from SingPost.