UPS plots bid for TNT
United Parcel Service (UPS) is plotting a EUR 10bn (GB 7.8bn) bid for Dutch rival TNT, a move that could herald the long-awaited consolidation in the global express-delivery business.
UPS has made an informal approach to TNT, its European rival and one of Royal Mail’s biggest competitors in Britain. Despite initial reluctance from TNT, early-stage talks about a potential tie-up have been held in recent days, The Sunday Telegraph has learned.
Soaring fuel costs have hit global courier businesses hard. The share prices of the main firms – UPS and FedEx in American and TNT and DHL in Europe – have suffered in recent months, making consolidation both cheaper and compelling.
UPS, which has a market value of USD 66.24bn and dominates the American delivery market with rival FedEx, has appointed investment bank Morgan Stanley as adviser.
The American company has also brought in strategy consultants AT Kearney to carry out a detailed report on a potential deal with TNT.
Insiders said that AT Kearney has now finished its report and delivered to Morgan Stanley, whose bankers are now spearheading discussions with TNT.
Both UPS and FedEx have eyed TNT’s parcel business for several years but are said to have been put off bidding for the firm because of its slower-growing postal division.
Sources said that UPS’ plans to buy TNT could include selling its postal division, possibly to a private equity buyer. It may instead decide to team up with a buyout firm. It is thought CVC, the European buyout giant, could be interested because it already owns stakes in Belgium postal operator De Post-La Post and Post Danmark, a Danish postal company.
A deal with TNT would deliver to UPS substantial cost savings as well as a vast European reach – something it has been trying to slowly build up in recent years. The company recently forged closer ties to TNT’s main rival, DHL, through its agreement to ferry the Deutsche Post unit’s packages between North American cities.
United Parcel Service (UPS) is plotting a EUR 10bn (GB 7.8bn) bid for Dutch rival TNT, a move that could herald the long-awaited consolidation in the global express-delivery business.
UPS has made an informal approach to TNT, its European rival and one of Royal Mail’s biggest competitors in Britain. Despite initial reluctance from TNT, early-stage talks about a potential tie-up have been held in recent days, The Sunday Telegraph has learned.
Soaring fuel costs have hit global courier businesses hard. The share prices of the main firms – UPS and FedEx in American and TNT and DHL in Europe – have suffered in recent months, making consolidation both cheaper and compelling.
UPS, which has a market value of USD 66.24bn and dominates the American delivery market with rival FedEx, has appointed investment bank Morgan Stanley as adviser.
The American company has also brought in strategy consultants AT Kearney to carry out a detailed report on a potential deal with TNT.
Insiders said that AT Kearney has now finished its report and delivered to Morgan Stanley, whose bankers are now spearheading discussions with TNT.
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TNT, which is being advised by Goldman Sachs, serves more than 200 countries and employs 161,500 people. The firm, which is listed in Amsterdam and has a market value of EUR 9.6bn, last year reported EUR 11bn in revenues and an operating income of EUR 1,192m.
Both UPS and FedEx have eyed TNT’s parcel business for several years but are said to have been put off bidding for the firm because of its slower-growing postal division.
Sources said that UPS’ plans to buy TNT could include selling its postal division, possibly to a private equity buyer. It may instead decide to team up with a buyout firm. It is thought CVC, the European buyout giant, could be interested because it already owns stakes in Belgium postal operator De Post-La Post and Post Danmark, a Danish postal company.
A deal with TNT would deliver to UPS substantial cost savings as well as a vast European reach – something it has been trying to slowly build up in recent years. The company recently forged closer ties to TNT’s main rival, DHL, through its agreement to ferry the Deutsche Post unit’s packages between North American cities.
Sources close to the situation said discussions were being held about the future management of a UPS tie-up with TNT. The American firm is run by Scott Davis, who joined UPS in 1986. Ben Verwaaayen, former chief executive of telecoms group BT, also sits on the board of UPS alongside Rudy Markham, the former chief financial officer of Unilever.
The Dutch target is led by Peter Bakker, who has been chief executive since 2001.
The industry’s biggest deal was done three years ago when Deutsche Post – which owns the DHL express service – acquired Exel, the UK-based logistics group, for GBP 3.7bn.
On Friday, TNT’s shares closed at EUR 25.36, valuing the business at EUR 9.6bn.
