(Fixes quote in third paragragh to show reference to acquisition of Selektmail, not Sandd)
* Deal could take some pricing pressure off TNT
* Subject to Dutch watchdog approval
* TNT shares up 2.9 pct, outperforming index
AMSTERDAM, Jan 12 Dutch mail company Sandd said on Wednesday it would buy Deutsche Post's (DPWGn.DE) unit Selektmail, subject to regulatory approval, consolidating the Dutch postal market where TNT TNT.AS dominates.
Private-equity owned Sandd, seen as a possible takeover target, said the merger of the second and third-largest mail firms in the Netherlands was expected to boost its market share from 10 percent in 2010 to 16 percent in 2011.
"Consolidation could have gone both ways but today we are announcing our acquisition of Selektmail. We will integrate the delivery networks of the two companies and continue to focus on the business market," Sandd spokesman Lukas Burgering said.
While officially the two companies are still negotiating, the only condition left for the transaction to go through is for the Dutch competition authority NMa to give the green light, which is expected in the next couple of months, Burgering said.
Deutsche Post said it was looking into strategic options for Selektmail, which has about 200 staff, and declined to comment further. Neither party would disclose the value of the deal.
Shares in Dutch postal market leader TNT, which also benefited on Wednesday from a rating upgrade by HSBC, hit a four-month high and were up 2.9 percent to 20.2 euros at 1128 GMT, outperforming a 0.6 percent rise in Amsterdam's bluechip index .AEX.
"This deal could take some pricing pressure off TNT and allow it to gain volumes. Both Sandd and Selektmail are loss-making and Sandd is looking for cash in a deteriorating pricing environment," Rabo Securities analyst Philip Scholte said.
Sandd has annual revenue of around 80 million euros while Selektmail has sales of close to 55 million euros, Scholte said. In 2009, TNT posted revenues of 4.22 billion euros, some 40 percent of the international group's total sales.
Although Sandd, which specialises in addressed mail for business clients, delivering items such as magazines and catalogues, is less vulnerable to the rise of electronic communications, it has had to slash prices and keep overheads low to compete with TNT.
In December, TNT, which is splitting mail from its express unit, reached a deal with Dutch postal unions to cut the number of forced lay-offs planned, ending strike action that threatened to derail a possible mail unit sale. [ID:nLDE6BF03X]
Sandd, which launched a decade ago and derives its name from "sort and deliver", is majority-owned and controlled by Dutch investment firm Trimoteur.
In 2009, it had spoken to several mail operators, including Deutche Post, about selling itself, a source familiar with the matter told Reuters at the time.
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