Speculation that UPS is in talks to offer €10 billion for TNT drove up the Dutch group’s sharesstrongly today but they then slumped after a top UPS executive played down a possible acquisition,
highlighting the US firm’s China growth plans instead. The developments came just weeks afterspeculation over a possible FedEx bid for TNT.British newspaper The Sunday Telegraph reported that UPS was planning to make a €10 billionoffer for TNT, whose market capitalisation it put at €9.6 billion. It wrote that despite initialreluctance from TNT, the two companies had been in early talks about an agreement in recent days.UPS had appointed Morgan Stanley as financial adviser and commissioned a report on TNT fromconsultants AT Kearney, the newspaper wrote. TNT is being advised by Goldman Sachs, it added.
In response to the report, TNT shares rose about 6.5% in early trading today on the Amsterdamstock exchange, pushing the company’s valuation past €11 billion.
But they then slumped sharply by more than 10% just after 12:00 CET soon after Reuterspublished an interview with UPS’ head of international business, Dan Brutto, in which he playeddown the report as “a rumour”. Such a deal would devalue UPS’ own shares, he commented. Brutto,speaking in Beijing, said that UPS wanted to expand strongly in China, would open two $180 millionhubs there, and was open to acquisitions in the country.
By 14:30 CET today, TNT’s share price was down 2.6% at €24.70, leaving the company valued at€10.45 billion.
TNT shares have fluctuated strongly in recent weeks following a Financial Times report inmid-July that FedEx was preparing a bid. TNT was valued at about €7.4 billion at the time. Itsshare then soared as much as 40%, driving up the potential acquisition price. In late July, theWall Street Journal reported that FedEx had decided to drop the plan for financial reasons,prompting the strongest fall in TNT’s share price since its 1998 flotation.
TNT, the smallest of the four “global integrators” has long been the subject of speculationabout a possible takeover bid by either FedEx or UPS. The Dutch group’s express business, which isvery strong in Europe and expanding fast in emerging markets, is seen as fitting well into theambitions of the two US giants to expand their international business, primarily in Europe andAsia, in order to reduce dependence on their US home market.
But experts believe any bidder would have to separate TNT into its component express and mailbusinesses, and find a new ownership structure for TNT Post given that US ownership of the nationalpostal operator would not be politically or socially acceptable in the Netherlands. There has beenspeculation that CVC, which already has stakes in Post Danmark and Belgian Post, might beinterested in TNT Post.
