UPS will only slightly raise its €9 per share offer for TNT Express following more talks betweenthe companies in recent weeks, according to reports.
The US company is expected only to raise the offer “by a symbolic amount at best” and fall shortof the €9.50 per share level, Reuters news agency reported yesterday, citing sources close to theongoing talks. According to Reuters, UPS has little incentive to improve its €9 per share offergiven TNT’s poor results and the absence of a counter bidder. Under Dutch law, UPS must make anupdated announcement about its intentions by (Friday) March 16.
Bloomberg reported on March 9 that the two sides are now close to a deal. TNT Express rejectedthe original €9 per share offer, which valued it at €4.9 billion, on February 17. TNT’s share priceclosed at €9.32 yesterday and was down 0.75% at €9.25 in late afternoon trading today.
Meanwhile, speculation is increasing about how European competition authorities would review anyUPS-TNT deal, in particular regarding combined market shares in large markets such as the UK andGermany. One key strategic issue is whether Brussels would insist on UPS selling off parts of TNTExpress in some markets in return for approving the overall deal. It is also unclear whether theCommission would review a deal based on international or national markets and to what extent itwould look into different market segments.
Analysts have said that UPS and TNT would have a combined European market share of about 17%,similar to that of market leader DHL Express. Figures published by Deutsche Post DHL last week inits 2011 annual report give DHL Express 38% of the €5.8 billion European international expressmarket ahead of UPS (23%), TNT (16%) and FedEx (11%). However, these figures exclude domesticexpress markets in Europe, in which smaller players have stronger positions.
In comparison, FedEx leads the €5.4 billion Americas international express market with 51%,ahead of UPS (32%), DHL Express (13%) and TNT (1%), according to the DP DHL figures. In the €5.4billion Asia Pacific international express market, DHL is the market leader with 36%, followed byFedEx (21%), the EMS postal express network (12%) and UPS (19%), the figures showed.
