TNT shareholders give go-ahead to demerger

Shareholders of TNT have approved the demerger of the company’s Express and Mail businesses. TNT confirmed the separation had been given to go-ahead during an Extraordinary General Meeting of Shareholders (EGM) earlier today (25 May).

The demerger of the Express Business will create a newly listed company, TNT Express, whilst TNT will continue the Mail Business under the new name of PostNL – with both companies having their shares listed on the stock exchange in Amsterdam.

TNT said the main reasons for separation were “the increasingly divergent strategic profiles of the two businesses and the limited synergies between them”. The company added that “separation will enable greater focus, transparency and two distinct investment opportunities for shareholders. It will also facilitate participation in possible sector consolidation”.

A TNT spokesman said: “The demerger will create two strong, independently listed companies, with solid funding positions, clear strategies and strong management teams.

“In Europe, TNT Express offers profitable growth through its existing core business and through the development of high-end B2C parcels, freight and in sector-specific value-added solutions. In emerging markets, TNT Express will continue to lead the way in the development of day-certain domestic express services and further grow its intercontinental activities on the China-Europe lane. In the medium term, TNT Express’ Europe Middle East and Africa revenue is to grow organically and through new initiatives, with an operating margin increasing to 10-11%. Asia-Pacific and Americas are to realise double-digit revenue growth and to provide a solid contribution to profitability.

“PostNL is one of the best postal operators in the world, with a proven track record in operational improvement. In the rest of Europe PostNL has leading positions in Germany, the UK and Italy. Growth will be realised through Mail’s highly successful Parcels unit and the International activities. PostNL’s target in 2015 is a stable cash operating income (including cash pension contributions and restructuring cash flows) of EUR 300 – 370m.”

Prior to demerger, the Express Business is held by TNT Express Holdco B.V., a direct wholly owned subsidiary of TNT N.V. TNT Express N.V. is also a direct wholly owned subsidiary of TNT N.V.  The demerger, which will result in the separation of TNT Express N.V. from TNT N.V., will be executed in two steps.

First, a demerger will take place on 30 May in which 70.1% of the shares in TNT Express Holdco B.V. is demerged by TNT N.V. to TNT Express N.V. As part of the legal demerger, TNT Express N.V. will allot ordinary shares to the existing shareholders of TNT N.V. TNT shareholders will receive one ordinary share in the newly listed TNT Express N.V. for each one ordinary TNT N.V. share currently held. The demerger will become effective immediately after 00.00 CET on 31 May.

Second, on 31 May the demerger will be followed by a merger between TNT Express N.V. and TNT Express Holdco B.V., after which TNT Express Holdco B.V. will cease to exist.

As part of the legal merger, TNT Express will allot such number of shares to TNT N.V. for it to hold 29.9% of the ordinary shares of TNT Express N.V. This minority stake is to be a financial shareholding to cover equity and funding requirements. It is governed by an agreement that provides for the terms and conditions on lockup and orderly market arrangements, subject to which Mail will reduce its shareholding over time. The merger will become effective immediately after 00.00 CET on 1 June.

As from 1 June the issued share capital of TNT Express N.V. will consist of 542,033,181 ordinary shares.

Ahead of the execution of the demerger, trading of the TNT Express N.V. shares on NYSE Euronext Amsterdam is expected to commence tomorrow, 26 May 2011, at 09:00 CET under the symbol “TNTE” on an “as if and when issued” basis. The “ex spin off” date of the shares in TNT N.V (to be renamed PostNL N.V. following the demerger) – then to be traded under the symbol “PNL” – will also be 26 May 2011. Initial settlement of trades on 26 May 2011 is expected to take place on 31 May 2011, before opening of business at NYSE Euronext Amsterdam. This is also the first day of irrevocable trading of the shares.

With the demerger approved, the current CEO’s position will become redundant and Peter Bakker will leave TNT after almost 20 years of service, of which the last 14 years as a member of the Board of Management.

Within the applicable original arrangements, in addition to the contractual notice period, the Supervisory Board and Bakker have agreed a compensation equal to two times his annual base salary for the termination of his employment. Bakker will step down as CEO and leave TNT effective 1 June 2011.