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UPS Reportedly On Verge Of Deal To Buy European Rival TNT

UPS Reportedly On Verge Of Deal To Buy European Rival TNT
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3/9/2012 9:43 AM ET

United Parcel Service Inc. (UPS: Quote) is reportedly close to making a major acquisition across the Atlantic that would enable the package delivery company to bolster its presence in Europe.

UPS is nearing a deal to acquire TNT Express NV after its initial 4.9 billion euro bid made in February was rejected by the Dutch package delivery company, Bloomberg reported Friday, citing people familiar with the matter.

The two companies are now said to be close to a deal on the price and terms, with an announcement expected to be made as early as next week.

In mid-February, UPS said it was still in talks to buy TNT despite its takeover bid being rejected.

The company made a bid on February 11 to buy the entire issued capital of TNT for 9 euros per share. The per share offer represented a 42 percent premium over the 6.34 euro per share at which TNT's stock closed on February 9.

TNT said its board considered the UPS proposal and subsequently rejected it. Nevertheless, Europe's second-largest package delivery company added that it would continue talks with UPS.

Last week, the Wall Street Journal said talks between the two companies slowed due to differences over matters related to personnel and on whether TNT's Dutch headquarters would serve as the headquarters for the companies' combined operations.

Under Dutch law, UPS is currently required to make its intentions clear to the market by March 16, four weeks after the initial announcement of its bid. An acquisition of TNT would enable UPS to expand in Europe, where Deutsche Post DHL (DPSTF.PK,DEUPF.PK) is the leader in express deliveries. UPS has been expanding its hub in Cologne, Germany. A deal would also give UPS an edge over rival FedEx Corp. (FDX: Quote) in Europe.

In mid-February, UPS said it has acquired Kiala, a firm based in Brussels that provides convenient delivery options to busy consumers purchasing goods over the Internet. Terms of the deal were not disclosed. UPS said the acquisition will broaden its service portfolio for business-to-consumer deliveries. TNT, which has been facing pressure from shareholders to explore strategic options, has been seen as a takeover target for either UPS or FedEx for quite some time now. FedEx was expected to make an offer for TNT after the UPS bid was rejected, but has so far not made an offer.

In mid-February,TNT reported a loss for the fourth quarter, reflecting weaker economic conditions and impairment charges at its Brazil operations. The results came shortly after the company's rejected the UPS takeover bid.

TNT split from Dutch mail company PostNL (PNLLY.PK)in May 2011, 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.

UPS closed Thursday's trading at $76.72, up $0.72 on a volume of 3.41 million shares.

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by RTT Staff Writer

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