Tags: UPS | TNT | Bid | takeover

UPS Extends TNT Talks After Weeks of Discussions Since Bid

Friday, 16 March 2012 12:01 PM

United Parcel Service Inc. extended takeover talks with TNT Express NV, Europe’s second-largest package delivery company, after four weeks of negotiations that followed the initial offer of $6.4 billion (4.89 billion euros.)

“Constructive discussions” continue, with a goal of sending a bid for TNT to regulators in the Netherlands within 12 weeks of the Feb. 17 announcement that bargaining was under way, Atlanta-based UPS said today in a statement. That timeline would end on May 11.

A successful combination would catapult UPS to equal footing in Europe with Deutsche Post AG’s DHL unit, the market leader. UPS and TNT are getting closer on a price, people familiar with the matter said last week. Hoofddorp, Netherlands- based TNT rejected a Feb. 11 offer of 9 euros a share.

“They’re not letting themselves be rushed or be put under pressure by shareholders,” said Dieter Furniere, an analyst at KBC Securities in Brussels with a hold rating on TNT. “That maybe indicates it’s mainly relating to social and employment issues.”

TNT’s board was unhappy with terms attached to the first bid that may have required divestitures to win regulatory approval, possibly leading to job cuts, a person familiar with the matter said last month.

Today’s Trading

The shares gained 0.9 percent to 9.31 euros at 3:43 p.m. in Amsterdam. UPS slid 0.3 percent to $78.72 in New York.

TNT was spun off in May from the Dutch postal operator, which is now named PostNL and retains a 29.9 percent stake, according to data compiled by Bloomberg. TNT, whose name derives from the postwar Australian company Thomas Nationwide Transport, sold its Indian domestic road business in December and has been hurt by costs from revamping unprofitable Brazilian operations.

A bid from UPS, the world’s largest package-delivery company, or chief competitor FedEx Corp. had been anticipated for years as the U.S. companies studied European expansion. That talk gained momentum after the spinoff of the express business.

UPS controlled 7.7 percent of the European express-parcels market in 2010, compared with TNT’s 9.6 percent, according to Transport Intelligence. Combined, they would be about as large as DHL, which had a 17.6 percent share.

Overlapping operations, particularly in Europe, could produce synergies for UPS worth in excess of 400 million euros, according to Andre Mulder, an Amsterdam-based Kepler Capital Markets analyst who recommends buying TNT shares.

“This is a once-in-a-lifetime opportunity,” Mulder said on Feb. 19. “Of the four major players globally, TNT is the smallest one, so it’s the last opportunity.”

UPS has completed the acquisition of Brussels-based Kiala to bolster delivery operations in Belgium, France, the Netherlands, Spain and Luxembourg, after several smaller purchases in recent years, said David Campbell, a Thompson Davis & Co. analyst in Richmond, Virginia, who recommends buying UPS and FedEx.

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Friday, 16 March 2012 12:01 PM
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