Tags: ups | tnt | freight | delivery | m&a

UPS Nears Agreement With TNT After Initial Rejection

Thursday, 08 March 2012 05:32 PM

United Parcel Service Inc. is nearing an agreement to buy TNT Express NV, Europe’s second-largest package-delivery company, after an initial 4.9 billion euro ($6.5 billion) offer was rejected, people familiar with the matter said Thursday.

The sides are now close to a deal on the price, following UPS’s bid of 9 euros a share last month, and on conditions that may lead to job cuts and require divestitures to win antitrust approval, according to two people who declined to be identified because the talks are private. An announcement may come as soon as next week, one of the people said.

Buying Amsterdam-based TNT would bolster European operations for UPS, the world’s biggest package-delivery company. With expansion already under way in Germany, UPS would be able to cut overlap there and elsewhere in Europe to satisfy regulators, said Kevin Sterling, a BB&T Capital Markets analyst.

“It probably depends on where there’s heavy concentration,” Sterling, who is based in Richmond, Virginia, said in a telephone interview. “It would have to be probably on a case by case basis by each country.”

Sterling, who recommends buying shares of UPS, said he doesn’t think the Atlanta-based company will pay much more than 9 euros a share for TNT.

Deutsche Post’s DHL

UPS and TNT have been in talks after TNT rejected its offer last month. Acquiring TNT would put UPS almost on par with Deutsche Post AG’s DHL in European express shipments, according to researcher Transport Intelligence.

While talks are ongoing, the companies may still fail to reach an agreement, the people said. Spokesmen for UPS and TNT declined to comment on the negotiations.

A combined company would have a 17.3 percent share in European express shipments, before any divestitures, compared with DHL’s 17.6 percent, based on Transport Intelligence data. The purchase would probably require sales of road operations and depots in Benelux countries and the U.K. to satisfy antitrust regulators, ABN Amro analyst Maarten Bakker said last month.

UPS advanced 1 percent to $76.72 at the close in New York. TNT’s shares closed up 0.7 percent to 9.3 euros in Amsterdam.

Under Dutch law, UPS has to clarify its intentions to the market by March 16, within four weeks of its first proposal being announced.

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Thursday, 08 March 2012 05:32 PM
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