UPS buys TNT to be market leader in Europe
Source: Agencies |
March 20, 2012, Tuesday
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UNITED Parcel Service will pay US$6.85 billion for Dutch peer TNT Express in a deal that will make the world's largest package delivery company the market leader in Europe.
UPS will also get access to TNT's stronger networks in the fast-growing Asian and Latin American markets, increasing the US company's global sales to more than 45 billion euros (US$59 billion) and leaving it with 477,000 employees.
The deal has raised concerns that smaller companies will find it harder to compete. Germany's Deutsche Post DHL, the closest rival in Europe, said the European Commission should examine the proposed takeover thoroughly.
TNT yesterday said its executive and supervisory boards unanimously supported UPS's offer of 9.50 euros per share, a premium of nearly 54 percent, up from an initial 9 euros per share last month.
TNT's biggest shareholder PostNL, which owns 29.8 percent, also said it backed the offer, which UPS said it would finance through a combination of US$3 billion in available cash and new debt.
"It's a difficult day and a great day. Difficult because TNT is a proud company and it is difficult to agree to be acquired," said TNT Express head Marie-Christine Lombard.
"It's a great day because the combination of the two companies ... will be enhanced and really deliver the global leader that will be unequaled."
The offer ends years of talk about the future of the Dutch delivery firm, which was split from the Dutch mail company PostNL and listed last year.
With falling profit and a poor outlook for 2012, TNT's management had come under intense pressure from activist shareholders, including Jana Partners and Alberta Investment Management Corp, to seek a buyer.
UPS has long looked at TNT as a way to help it expand in Europe, especially Britain, France and Germany. It said it was confident the European antitrust watchdog would clear the offer without a prolonged probe.
Analysts said the company might need to sell some assets to ensure the deal won the stamp of approval.
"We expect some divestments will be needed for the competition clearances," DZ Bank analyst Robert Czerwensky said.
A spokesman for Germany's Deutsche Post DHL said the acquisition would further strengthen the power of a significant player in a market with limited participants.
Trade unions said UPS had agreed to continue collective labor agreements and had not heard of any plans to make job cuts but analysts said the deal could impact thousands of employees.
"With TNT about two times as large as UPS in Europe, this could affect more than 20,000 jobs at TNT in Europe alone," said Kelper Capital Markets analyst Andre Mulder.
Scott Davis, UPS chief executive, said it would take four years to integrate TNT, including replacing the Dutch firm's trademark orange logo with the brown of UPS but it was "way too early" to talk about job cuts.
UPS will also get access to TNT's stronger networks in the fast-growing Asian and Latin American markets, increasing the US company's global sales to more than 45 billion euros (US$59 billion) and leaving it with 477,000 employees.
The deal has raised concerns that smaller companies will find it harder to compete. Germany's Deutsche Post DHL, the closest rival in Europe, said the European Commission should examine the proposed takeover thoroughly.
TNT yesterday said its executive and supervisory boards unanimously supported UPS's offer of 9.50 euros per share, a premium of nearly 54 percent, up from an initial 9 euros per share last month.
TNT's biggest shareholder PostNL, which owns 29.8 percent, also said it backed the offer, which UPS said it would finance through a combination of US$3 billion in available cash and new debt.
"It's a difficult day and a great day. Difficult because TNT is a proud company and it is difficult to agree to be acquired," said TNT Express head Marie-Christine Lombard.
"It's a great day because the combination of the two companies ... will be enhanced and really deliver the global leader that will be unequaled."
The offer ends years of talk about the future of the Dutch delivery firm, which was split from the Dutch mail company PostNL and listed last year.
With falling profit and a poor outlook for 2012, TNT's management had come under intense pressure from activist shareholders, including Jana Partners and Alberta Investment Management Corp, to seek a buyer.
UPS has long looked at TNT as a way to help it expand in Europe, especially Britain, France and Germany. It said it was confident the European antitrust watchdog would clear the offer without a prolonged probe.
Analysts said the company might need to sell some assets to ensure the deal won the stamp of approval.
"We expect some divestments will be needed for the competition clearances," DZ Bank analyst Robert Czerwensky said.
A spokesman for Germany's Deutsche Post DHL said the acquisition would further strengthen the power of a significant player in a market with limited participants.
Trade unions said UPS had agreed to continue collective labor agreements and had not heard of any plans to make job cuts but analysts said the deal could impact thousands of employees.
"With TNT about two times as large as UPS in Europe, this could affect more than 20,000 jobs at TNT in Europe alone," said Kelper Capital Markets analyst Andre Mulder.
Scott Davis, UPS chief executive, said it would take four years to integrate TNT, including replacing the Dutch firm's trademark orange logo with the brown of UPS but it was "way too early" to talk about job cuts.
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