UPS to buy Dutch delivery company TNT Express for $6.8 billion
| AMSTERDAM
United Parcel Service Inc. said Monday it will buy Netherlands-based聽TNT聽Express NV for $6.77 billion (鈧�5.16 billion) in a cash deal that will create a company with annual sales of 鈧�60 billion.
Atlanta-based聽UPS聽is the world's largest delivery company, while聽TNT, headquartered in Hoofddorp, Netherlands, is the second-biggest express mail company in Europe behind Germany's DHL. The combination will have 475,000 employees worldwide and increase UPS's international sales to around 36 percent of its total from 26 percent at present.
"Why is聽TNT聽very attractive?" said聽UPS聽Chief Financial Officer Kurt Kuehn at a press conference in Amsterdam. Because it has "operations in areas where we're underserved. Brazil. Australia. The Middle East. The road and train network in Europe."
He said聽UPS聽hopes to further boost its international sales to 50 percent in the next five years.
The merger is not expected to face serious opposition from antitrust authorities, as聽TNT聽has virtually no presence in the U.S., while the European market is highly fragmented.
The agreed deal, UPS's largest ever acquisition, offers聽TNT聽shareholders 鈧�9.5 per share.聽TNT's聽largest shareholder, Dutch postal company PostNL, said it has committed to tendering its 29.9 percent stake to聽UPS.
The聽UPS聽bid represents a 54 percent premium to聽TNT's聽closing price on Feb. 16, but is only 5.6 percent higher than the 鈧�9 "informal" offer聽UPS聽made the following day, which聽TNT's聽management rejected.
TNT聽shares closed at 鈧�9.35 on Friday in expectation of a higher offer. They rose 1.1 percent to 鈧�9.447 in Amsterdam, signaling investors believe the offer will almost certainly be accepted.
"The token 50 cents improvement on last month's informal proposal is hardly surprising," said SNS Securities analyst Geert Steens. "TNT聽Express has since released disappointing results, confirming the sad state of most of its non-European businesses."
He advised investors to "take what is currently on the table."
On Feb. 21,聽TNT聽reported a loss of 鈧�173 million ($229 million) for the fourth quarter, including a 鈧�104 million charge on its Brazilian arm and another 鈧�45 million to write down the value of its airplane fleet. Revenues rose 2.8 percent to 鈧�1.85 billion ($2.5 billion).
Challenged on why聽UPS聽wants to expand in Europe at a time the continent's economy is faltering in the wake of a raging debt crisis, CFO Kuehn said it shows the company's "long-standing commitment to Europe."
He said the deal will add to earnings per share in the first year, and that by 2015 the companies will save at least 鈧�440 million annually from combining operations, including air fleets, as well as software and logistics systems.
However,聽UPS聽expects to spend a one-time 鈧�1 billion to realize those savings.
Kuehn declined to answer questions about potential sales of operations or job cuts at聽TNT. He said he expects the deal to close in the third quarter of 2012.
UPS's offer includes a provision that would award聽TNT聽鈧�200 million if the deal fails to win regulatory approval. It also specifies聽TNT聽can only consider competing bids 8 percent higher and must pay聽UPS聽鈧�50 million if it breaks off the deal.
贬辞飞别惫别谤,听罢狈罢听颁丑颈别蹿 Executive Marie-Christine Lombard said she had not been contacted by the most likely alternative bidder, FedEx Corp., and FedEx has so far said it is not interested in聽TNT.
