UPS commences offer period for acquisition of TNT Express

UPS and Netherlands-based TNT NV, a provider of mail and courier services and the fourth largest global parcel operator, said today that UPS’s $6.5 billion cash offer for TNT, which was announced in March, commences tomorrow and will run through August 31.

When the deal was first made public, it was made in the form of an all-cash offer of $9.50 per ordinary share for TNT Express.

UPS and TNT officials said in a joint statement issued today that the Executive Board and the Supervisory Board of TNT Express fully support and unanimously recommend the Offer to the Shareholders for acceptance. They said that this “transaction will create a global leader in the logistics industry with more than $60 billion in annual revenues and an enhanced, integrated global network.”

The joint synergies expected to result from this deal, according to UPS and TNT include:
-the complementary strengths of both organizations creating a customer-focused global platform that will be a leader in transportation technology and customer service;
-TNT Express customers benefiting from UPS’s unparalleled access to the North American market as well as access to its logistics solutions, such as global freight forwarding and distribution capabilities; and
-UPS customers will benefit from access to expanded express and road freight capabilities in Europe and broader capabilities in fast-growing regions such as Asia-Pacific and Latin America.
“We intend to leverage the strengths of both companies to enhance the combined growth portfolio and believe all stakeholders will benefit,” said UPS Chairman and CEO Scott Davis on an investor call in March. “UPS possesses a large U.S. presence, as well as experience in global supply chain management. TNT Express provides additional small package access points in Europe, the most extensive European express road network, and an expanding presence in emerging markets.”
Davis said this combined entity will provide an expanded geographic reach with a broader service offering for its combined customers. And he stressed that both organizations have a strong cultural fit, with strong focuses on customer service, and operational excellence.
Over the years, TNT has grown into a highly respected $7.25 billion euro company with diverse revenue streams from around the world with operations in more than 200 countries in Europe, the Middle East, Asia Pacific and Latin America, said UPS CFO Kurt Kuehn on the March investor call. And he added TNT has a substantial group of assets, including aircraft, vehicles, hubs, and depots, which cumulatively account for about 1 million deliveries per day handled by its 77,000 employees. IN 2011, TNT had a net loss of $270 million euro and $7.2 billion euro in revenue.
And according to UPS estimates about 23 percent of TNT Express’s Europe revenues are from its express road freight operations, which Kuehn described as an important and vital part of its business and a real differentiator.
The statement issued today said that TNT Express will convene an Extraordinary General Meeting of Shareholders on August 6 in which the offer will be discussed, and on June 15 a request for EU regulatory approval of the deal was filed by UPS.

A Bloomberg report noted that UPS is seeking acceptance of the deal from at least 80 percent of TNT shareholders. In May 2011, TNT N.V announced its intentions to “de-merge” operations with PostNL NV by separating its Express and Mail operations into two separate companies. The companies said today that PostNL NV has tendered its 29.8 percent stake in TNT Express.