March 18, 2012 10:00 pm
UPS agrees to buy TNT Express for €5bn
UPS, the US package delivery company, has agreed a deal to buy its European rival TNT Express in a takeover that is likely to value the Dutch delivery company at about €5bn, people familiar with the talks said.
The agreement, which was reached on Sunday, could be announced as soon as Monday, with UPS likely to be offering about €9.50 a share for TNT Express, the people said.
A bid of about €9.5 a share would represent a second increase on UPS's first offer to TNT Express of €8.25 a share, which it made in November last year. The US logistics company, which had started work on the potential bid at the start of 2011, increased its offer to €9 on February 11.The deal would bring to an end years of speculation about a tie-up between the two delivery companies. FedEx had also pursued TNT in 2008. A combination with TNT Express would increase UPS's presence in Europe but would also give the US company a domestic network in China, where it has been keen to expand.
However the Dutch delivery company rejected that offer. The two have been in talks since. UPS and TNT Express declined to comment.
Following UPS's approach to TNT last month, the Dutch company's shares soared over €10. However, since then they have fallen, trading at €9.35 on Friday.
The takeover talks, which UPS has been working on for the past year, follow pressure on the Dutch deliver company from activist shareholders, led by US hedge fund Jana Partners.
Jana Partners was among the shareholders that pushed for the break-up of the former TNT into TNT Express and Dutch postal company PostNL last May. PostNL holds a 29.9 per cent stake in TNT Express.
The takeover, if finalised, would be the largest in UPS's history. Despite having a market capitalisation of about $74bn and buying about 30 companies since 1999, the largest deal it has struck was for Overnite, a trucking company, for about $1.3bn in 2005.
The Dutch and Belgian unions representing TNT Express workers have demanded that the companies guarantee there will be no forced redundancies in Belgium due to any merger, and that TNT Express retain its headquarters in the Netherlands.
TNT Express last month said it suffered a net loss of €173m in the fourth quarter of 2011 and was planning to refocus on its core European operations.
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