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UPS Persists With $6.43 Bln Bid For TNT Despite Rejection

UPS Persists With $6.43 Bln Bid For TNT Despite Rejection
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2/18/2012 3:09 AM ET

Another absorbing takeover battle is on the cards, with the proposition rendered more attractive due to the fact that the two parties are from both sides of the Atlantic. Will UPS devliver the goods to take TNT Express into its fold? The stakeholders wait with bated breath as the drama unfolds.

United Parcel Service (UPS: Quote) said Friday that it is still in discussions to buy TNT Express NV, even after the Dutch company rejected a $6.43 billion takeover bid. The U.S. company had confirmed that it made a revised bid on February 11th to buy the entire issued capital of TNT for 9 euros per share. The per share offer represents a 42 percent premium over the 6.343 euro per share at which the stock closed on Friday.

Earlier, TNT released a statement saying that its board has considered the proposal of UPS and has subsequently rejected it. Nevertheless, Europe's second-largest package-delivery company said it continues to be in discussions.

Incidentally, UPS has also termed the discussion as ongoing, although cautioning that there is currently no certainty that any agreement will be reached.

TNT Express, which has been facing pressure from shareholders to explore strategic options, has been seen as a takeover target for either UPS or smaller rival FedEx (FDX: Quote) for some time. FedEx shares fell 2.12 percent to close at $92.99 on the New York Stock Exchange on Friday.

A slowing European economy has forced TNT to cut its 2011 operating margin target for Europe, the Middle East and Africa to 8 percent to 9 percent in October, and the company lost 97 million euros in the first nine months of 2011 versus a profit of 62 million euros last year.

TNT split from Dutch mail company PostNL in May, as shareholders pressured TNT to shake up its board and boost shareholder value. Currently, PostNL is the largest shareholder in TNT Express with a 29.9 percent stake and has taken impairments of more than 700 million euros on its stake in recent months.

The proposed offer presents UPS with an opportunity to expand its business further in Europe. UPS shares closed Friday's regular trading session at $76.76. In after-hours trading, the shares declined 0.25% and ended at $76.57.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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