Business, Freight News, Logistics, Road

UPS to buy TNT

[ March 19, 2012   //   ]

UPS has agreed to buy rival carrier TNT Express for about €5.16 billion, slightly more than the initial €4.9 billion offer rejected by the Dutch-based operator earlier this month. TNT’s executive and supervisory boards said they would unanimously intend to support and recommend the offer.

In a joint statement, the two companies said the merger would create “a global leader in the logistics industry with more than €45 billion ($60 billion) in annual revenue and an enhanced, integrated global network.” (DHL’s total annual revenue for 2011 was about €53bn while forn FedEx it was abou t €30bn or $39m) and the two companies’ strengths would complement each other. Integration of TNT Express’ intra-Europe road freight network would expand UPS’s logistics solutions there and would deepen UPS’s existing position in fast-growing regions such as Asia-Pacific and Latin America.

At the same time, TNT Express customers would “benefit 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.”

UPS added that the purchase would deliver around €400 to €550 million in “pre-tax cost synergies” in about four years’ time.

UPS added that the proposed transaction would accelerate UPS’s growth strategy, increase its geographic diversity and ability to provide customers comprehensive solutions, significantly enhancing its ability to serve its customers’ complex global logistics needs. Following the transaction, around 36% of the combined group’s revenues will be generated outside the US compared with 25% currently.

With a combined network and enhanced IT platforms, customers will have access to deeper product capabilities and broader reach through the expanded geographies served, giving them more choice and flexibility to support the growth and globalization of their businesses. The combination also will offer employees greater opportunities to be part of a global, growing and respected business, the statement added.

UPS added that it recognised the expertise of TNT Express’ leading road freight network in Europe and awould “create a meaningful center of excellence for marketing, sales, and operations in the Netherlands.” Moreover, “UPS recognizes the significant value of TNT Express’ operations, assets and people in Liège and will seek to continue the future utilization of these operations, assets and people within the combined group.”

After completion of the offer, the TNT Express supervisory will include at least three members identified by UPS and two members of the current Supervisory Board of TNT Express, namely Shemaya Levy and Margot Scheltema, acting as independent supervisory directors until the third anniversary of the settlement date.

Under the terms of the deal, either party may terminate the merger iif an alternative offer that exceeds the current offer price by at least 8% is made. However, UPS has so far emerged as the only purchaser of the Dutch company.


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