Dutch unions urge government action over TNT Express

The unions Abvakabo FNV and FNV Bondgenoten warned that pressure by investors including Jana Partners and AIMCO to make changes in the board of the struggling shipping giant could have impacts on job security, working conditions and pensions for staff.

While they said Jana and AIMCO have a relatively small stake in TNT Express, around 5% between them, the unions pointed to the dangers of “activist” shareholders as seen previously in Dutch companies like Stork, HEMA, ABN AMRO and PCM.

Jana and AIMCO are also known to have the support of other investors in their request for change, including MacKenzie and Franklin Mutual, and these shareholders also have stakes in PostNL.

The unions are now demanding a meeting with Dutch ministers over the issue.

Susan Eijgermans, the director of Abvakabo FNV and Egon Groen, the leader of FNV Bondgenoten, said in the letter: “We are not waiting for a shareholder who is merely bent on maximisation of quick profit.”

Pressure

TNT was already split into two, demerging from mail operations that became PostNL in May, in the hope that the move would create better value for shareholders, however TNT’s company value has dropped 34% since the split.

Earlier this month, PostNL publicly backed the current leadership at TNT Express. The company continues to have a 29.9% stake in TNT Express, but the struggles of the express company has seen it taking a EUR 734m cost because of its stake.

Investors are currently being advised that the current shareholder activism is positive for TNT Express, and that even if TNT ignores the requested board changes, the changes could be proposed formally at the 11 April AGM.

Industry analysts generally see the pressure for board changes as positive for the outlook of TNT Express shares, with share prices rising “significantly” in the last two months with the demands for change, alongside re-emerging talk of TNT Express becoming a merger/acquisition target.

Analysts at Morgan Stanley advised last week that the proposed board changes, which includes bringing in former TNT Express CEO Alan Jones, would “help stop the deterioration in the underlying value of the business”.

They see ongoing risk in the TNT Express operations, which have been going through a difficult time in Brazil and in Asia, with major earnings reliant on European countries that are facing the prospect of austerity measures to restore national budgets.

Analysts at JP Morgan suggest the issue of board changes will likely to go a vote at the TNT Express AGM in April.

They advise that a possible merger or acquisition of TNT Express would be “sensible” given its presence in Europe and the potential addition to a suitor like FedEx or UPS, but that such a move is “not necessarily inevitable”, particularly since the major shipping rivals have not responded to the current market speculation.