TNT’s stock price catapulted more than 50% today as investors bought up shares in hopes ofprofiting from any takeover by UPS or a bidding war if FedEx enters the fray.
TNT shares were trading at €9.90 early afternoon, up 56% from yesterday’s closing price of€6.34. This gave the company a market capitalisation of €5.36 billion.
Traders bought up the stock in early trading following news that the Dutch company had rejecteda €9 per share takeover offer from UPS which valued it at €4.9 billion. The two firms remain intalks, raising hopes on the financial markets of a higher offer from UPS for TNT or a rival offerfrom FedEx.
The surge took the TNT stock above the IPO price of €8.90 when it listed as an independentcompany on May 26 last year. The share had slumped to a low of €4.64 last August and had recoveredto the €6-6.50 range since the start of January.
Analyst André Mulder, of Kepler Capital Markets, told CEP-Research that “TNT is by far thesmallest of the four express players, making this a once-in-a-lifetime opportunity”. He said “themove of UPS is as such a surprise as there is no real urgency from UPS to bid for TNT”.
Mulder added: “We had expected Fedex to move as its European domestic share is only 2%, runningthe risk that in time it might lose clients because of this low coverage, turning to others (UPS)once globalisation accelerates. We feel it is still possible that Fedex might act.” But he ruledout any Deutsche Post DHL bid for TNT due to the high overlaps of business activities.
Mulder said that competing bids from UPS and FedEx could even rise to the €13-14 level. TheKepler analyst said he had predicted a possible takeover price of €11 per share based on TNT’sstrategic value in Europe, recovery potential outside Europe and up to €500 million in cost-savingsynergies due to overlaps with UPS in Europe. He played down any significant objections fromcompetition authorities to a UPS takeover due to low combined market shares.
TNT Express will announce its Q4 and 2011 results tomorrow (Tuesday February 21) with thetakeover offer now expected to dominate the financial figures.
