UPS has announced it will buy back fewer shares than planned this year in order to use its largecash stockpile to finance the €5.16 billion ($6.8 billion) acquisition of TNT Express.
The US company said it now expects to use approximately $5 billion of available cash andissue about $1.8 billion in new debt to finance the acquisition of TNT Express. Thisrepresents a $2 billion increase in cash used to fund the acquisition compared to its initialguidance.
As a result, UPS revised its guidance for share repurchases. The firm now plans to spend$1.5 billion on share repurchases in 2012 and expects the same level of activity in 2013. InJanuary, prior to the TNT offer announcement, it had said it planned to spend $2.7 billion in cashon share buybacks this year.
The UPS Board of Directors yesterday approved an open-ended $5 billion stock repurchaseauthorisation, replacing one dating back to 2008.
“UPS’s legacy of financial strength allows us to complete the acquisition of TNT primarilyusing cash,” said CEO Scott Davis. “At the same time, UPS remains committed to its policy ofshareowner returns through dividends and share repurchases. We believe this acquisitioncreates a global leader in the logistics industry, enhancing long-term growth for UPS investors.”
UPS and TNT Express announced on March 19 a definitive all-cash offer of €9.50 per ordinaryshare of TNT, valuing the deal at roughly $6.8 billion. The acquisition, which must bereviewed by European Union regulatory authorities, is expected to close in the third quarter.
