UNITED PARCEL Service has extended takeover talks with TNT Express, Europe’s second-largest package delivery company, after four weeks of negotiations that followed the initial offer of $6.4 billion (€4.89 billion).
“Constructive discussions” continue, with a goal of sending a bid for TNT to regulators in the Netherlands within 12 weeks of the February 17th announcement that bargaining was under way, UPS said in a statement. That timeline would end on May 11th.
A successful combination would catapult UPS to equal footing in Europe with Deutsche Post’s DHL unit, the market leader.
UPS and TNT are getting closer on a price, people familiar with the matter said last week. TNT rejected a February 11th offer of €9 a share.
“They’re not letting themselves be rushed or be put under pressure by shareholders,” said Dieter Furniere, an analyst at KBC Securities with a hold rating on TNT. “That maybe indicates it’s mainly relating to social and employment issues.”
TNT’s board was unhappy with terms attached to the first bid that may have required divestitures to win regulatory approval, possibly leading to job cuts, a person familiar with the matter said last month.
TNT shares gained 0.9 per cent to 9.31 euro in Amsterdam yesterday. UPS slid 0.3 per cent to $78.72 in New York.
TNT was spun off in May from the Dutch postal operator, which is now named PostNL and retains a 29.9 per cent stake.
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.
A bid from UPS, the world’s largest package-delivery company, or chief competitor FedEx had been anticipated for years as the US companies studied European expansion. That talk gained momentum after the spin-off of the express business.
UPS controlled 7.7 per cent of the European express-parcels market in 2010, compared with TNT’s 9.6 per cent, according to Transport Intelligence. Combined, they would be about as large as DHL, which had a 17.6 per cent share. – (Bloomberg)
