UPS/TNT Merger
03-18-2012 | 01:40 PM
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UPS/TNT Merger
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UPS Said to Reach Deal to Buy TNT Express to Grow in Europe
By Aaron Kirchfeld, Jacqueline Simmons and Alex Webb - Mar 18, 2012
United Parcel Service Inc. (UPS) reached an agreement to buy TNT Express NV (TNTE) after raising its offer for Europe’s second-largest express delivery company, according to two people with knowledge of the talks.
The price probably will be 9.50 euros ($12.51) to 10 euros a share and an announcement will come as soon as tomorrow, said the people, who weren’t authorized to speak publicly. The low end of that range would value TNT at 5.16 billion euros. Company spokesmen declined to comment today.
Acquiring TNT will put Atlanta-based UPS on equal footing in Europe with Deutsche Post AG (DPW)’s DHL, the region’s largest delivery operator. The takeover accord caps more than a month of talks disclosed Feb. 17 after Hoofddorp, Netherlands-based TNT turned down a bid of 9 euros a share.
“For them to get a little higher offer means they can declare a victory and sign on the dotted line and go home,” Kevin Sterling, a BB&T Capital Markets analyst in Richmond, Virginia, said in a telephone interview. With TNT losing money, the company had “no other options but to sell.”
TNT closed at 9.35 euros in Amsterdam on March 16, giving the company a market value of 5.08 billion euros, according to data compiled by Bloomberg. UPS, the world’s biggest package- delivery company, traded at $78.41 in New York.
Deal Valuation
At the range of 9.50 to 10 euros a share, the deal would value TNT at 13 to 14 times its last four quarters’ earnings before interest, taxes, depreciation and amortization, compared with a median of 10 times trailing Ebitda in nine other similar deals, according to data compiled by Bloomberg.
“That price is a bit ahead of what the shares are trading at currently, so they seem to be getting a bit of a premium,” said Dieter Furniere, a Brussels-based KBC Securities analyst who has a hold rating on TNT. Sterling recommends buying UPS.
Overlapping operations, particularly in Europe, may produce synergies for UPS worth more than 400 million euros, according to Andre Mulder, an analyst at Kepler Capital Markets in Amsterdam, who recommends buying TNT shares.
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.
Buying TNT will be the UPS’s biggest purchase since the company was founded in 1907 as a bicycle-messenger service. The deal tops the 2005 acquisition of Overnite Corp. (OVNT) for about $1.25 billion in cash, which gave UPS the ability to make U.S. land shipments of parcels too large to be lifted by a driver.
International Packages
International packages generate the most revenue for UPS, at $19.30 each in 2011, compared with $9.30 per domestic parcel. The $12.2 billion in sales for that business last year was 23 percent of UPS’s $53.1 billion total, which the company doesn’t disclose on a regional or country-by-country basis.
UPS’s initial offer was “highly conditional,” TNT said on Feb. 17, while adding that the two sides remained in talks. UPS said March 16 that negotiations had been extended, with a goal of sending a bid to Dutch regulators within 12 weeks of the Feb. 17 announcement that bargaining had begun.
TNT directors were unhappy with terms attached to the initial offer that may have required divestitures to win regulatory approval, possibly leading to job cuts, a person familiar with the matter said last month.
The company’s four main unions wrote Chief Executive Officer Marie-Christine Lombard and Supervisory Board Chairman Antony Burgmans on March 6 to express opposition to “forced” job reductions. TNT employed about 77,500 people as of Dec. 31.
Australian Roots
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.
After posting a 2011 operating loss of 105 million euros on Feb. 21, TNT said it would refocus operations on Europe, where its operating profit was 356 million euros last year. Operating losses were 360 million euros in the Americas and 76 million euros in the Asia-Pacific region.
A bid by UPS or FedEx Corp. (FDX) had been fodder for industry speculation for years as the U.S. companies studied expansion in Europe.
That talk gained momentum following the spinoff of TNT as an express operator, and some analysts and investors had predicted a possible late bid by FedEx after UPS’s interest was announced, a scenario that never came to pass.
Global Operations
In an industry in which UPS, FedEx and DHL already operate on a global scale, TNT was a “once-in-a-lifetime chance” for one of the biggest competitors to grow by gobbling up a substantial rival, Katrina Dudley, a portfolio manager at Mutual Series, a Franklin Templeton Investments unit, said last month. Mutual Series owns TNT shares.
UPS has completed the acquisition of Brussels-based Kiala to bolster 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.
To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at [email protected]; Jacqueline Simmons in Paris at [email protected]; Alex Webb in Frankfurt at [email protected]
To contact the editors responsible for this story: Ed Dufner at [email protected]; Chad Thomas at [email protected]; Frank Connelly at [email protected]
UPS Said to Reach Deal to Buy TNT Express to Grow in Europe
By Aaron Kirchfeld, Jacqueline Simmons and Alex Webb - Mar 18, 2012
United Parcel Service Inc. (UPS) reached an agreement to buy TNT Express NV (TNTE) after raising its offer for Europe’s second-largest express delivery company, according to two people with knowledge of the talks.
The price probably will be 9.50 euros ($12.51) to 10 euros a share and an announcement will come as soon as tomorrow, said the people, who weren’t authorized to speak publicly. The low end of that range would value TNT at 5.16 billion euros. Company spokesmen declined to comment today.
Acquiring TNT will put Atlanta-based UPS on equal footing in Europe with Deutsche Post AG (DPW)’s DHL, the region’s largest delivery operator. The takeover accord caps more than a month of talks disclosed Feb. 17 after Hoofddorp, Netherlands-based TNT turned down a bid of 9 euros a share.
“For them to get a little higher offer means they can declare a victory and sign on the dotted line and go home,” Kevin Sterling, a BB&T Capital Markets analyst in Richmond, Virginia, said in a telephone interview. With TNT losing money, the company had “no other options but to sell.”
TNT closed at 9.35 euros in Amsterdam on March 16, giving the company a market value of 5.08 billion euros, according to data compiled by Bloomberg. UPS, the world’s biggest package- delivery company, traded at $78.41 in New York.
Deal Valuation
At the range of 9.50 to 10 euros a share, the deal would value TNT at 13 to 14 times its last four quarters’ earnings before interest, taxes, depreciation and amortization, compared with a median of 10 times trailing Ebitda in nine other similar deals, according to data compiled by Bloomberg.
“That price is a bit ahead of what the shares are trading at currently, so they seem to be getting a bit of a premium,” said Dieter Furniere, a Brussels-based KBC Securities analyst who has a hold rating on TNT. Sterling recommends buying UPS.
Overlapping operations, particularly in Europe, may produce synergies for UPS worth more than 400 million euros, according to Andre Mulder, an analyst at Kepler Capital Markets in Amsterdam, who recommends buying TNT shares.
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.
Buying TNT will be the UPS’s biggest purchase since the company was founded in 1907 as a bicycle-messenger service. The deal tops the 2005 acquisition of Overnite Corp. (OVNT) for about $1.25 billion in cash, which gave UPS the ability to make U.S. land shipments of parcels too large to be lifted by a driver.
International Packages
International packages generate the most revenue for UPS, at $19.30 each in 2011, compared with $9.30 per domestic parcel. The $12.2 billion in sales for that business last year was 23 percent of UPS’s $53.1 billion total, which the company doesn’t disclose on a regional or country-by-country basis.
UPS’s initial offer was “highly conditional,” TNT said on Feb. 17, while adding that the two sides remained in talks. UPS said March 16 that negotiations had been extended, with a goal of sending a bid to Dutch regulators within 12 weeks of the Feb. 17 announcement that bargaining had begun.
TNT directors were unhappy with terms attached to the initial offer that may have required divestitures to win regulatory approval, possibly leading to job cuts, a person familiar with the matter said last month.
The company’s four main unions wrote Chief Executive Officer Marie-Christine Lombard and Supervisory Board Chairman Antony Burgmans on March 6 to express opposition to “forced” job reductions. TNT employed about 77,500 people as of Dec. 31.
Australian Roots
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.
After posting a 2011 operating loss of 105 million euros on Feb. 21, TNT said it would refocus operations on Europe, where its operating profit was 356 million euros last year. Operating losses were 360 million euros in the Americas and 76 million euros in the Asia-Pacific region.
A bid by UPS or FedEx Corp. (FDX) had been fodder for industry speculation for years as the U.S. companies studied expansion in Europe.
That talk gained momentum following the spinoff of TNT as an express operator, and some analysts and investors had predicted a possible late bid by FedEx after UPS’s interest was announced, a scenario that never came to pass.
Global Operations
In an industry in which UPS, FedEx and DHL already operate on a global scale, TNT was a “once-in-a-lifetime chance” for one of the biggest competitors to grow by gobbling up a substantial rival, Katrina Dudley, a portfolio manager at Mutual Series, a Franklin Templeton Investments unit, said last month. Mutual Series owns TNT shares.
UPS has completed the acquisition of Brussels-based Kiala to bolster 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.
To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at [email protected]; Jacqueline Simmons in Paris at [email protected]; Alex Webb in Frankfurt at [email protected]
To contact the editors responsible for this story: Ed Dufner at [email protected]; Chad Thomas at [email protected]; Frank Connelly at [email protected]
03-18-2012 | 01:57 PM
#2
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Whatever....
Not really a "merger".... Try "acquisition". 
The devil will be in the details.... IPA CBA requires disclosure before such a deal... guess how much our benevolent employer has kept us in the loop.
Not placing much gains for IPA in this... No ethics in this company for Gordon Gecko Davis running this company.
Worst case.... triple breasted airline... NURPS, european, us domestic.
Best case... foreign domiciles.
Discuss.
The devil will be in the details.... IPA CBA requires disclosure before such a deal... guess how much our benevolent employer has kept us in the loop.
Not placing much gains for IPA in this... No ethics in this company for Gordon Gecko Davis running this company.
Worst case.... triple breasted airline... NURPS, european, us domestic.
Best case... foreign domiciles.
Discuss.
03-18-2012 | 02:45 PM
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My guess is an increase in the number of recalls per month and a Cologne, Germany base.
What do I know, I was dropped as a small child. Talk amongst yourselves............
What do I know, I was dropped as a small child. Talk amongst yourselves............
Last edited by Shockwaves; 03-19-2012 at 05:49 AM.
03-18-2012 | 09:48 PM
#5
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Recalls, probably.
Koln base, don't think so. We don't magically get rights to fly to these new countries that we did not already fly to. A foreign domicile at this place would suck a$$. They would find a way to screw it up badly. The biggest difference should be loads out of Koln to the rest of the world. I do hope this adds to S.A. flying as I think we are really missing out on that area.
Maybe it will end the sudo SDF 74. LOL!!
Koln base, don't think so. We don't magically get rights to fly to these new countries that we did not already fly to. A foreign domicile at this place would suck a$$. They would find a way to screw it up badly. The biggest difference should be loads out of Koln to the rest of the world. I do hope this adds to S.A. flying as I think we are really missing out on that area.
Maybe it will end the sudo SDF 74. LOL!!
03-18-2012 | 11:29 PM
#6
Gets Weekends Off
Joined: Apr 2005
Posts: 171
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From: A cushion seat
I hope this pans out for the IPA. I think it will. I'm going to give it a chance. I think it will be a couple of months before we see anything happen from this deal. I bet there will be a lawsuit from someone on this too.
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