Activist investors have stepped up their campaign for strategy changes at TNT Express in responseto the falling share price and poor financial results by seeking a shake-up of the company’s
supervisory board.US-based fund Jana Partners, which last year already called for the departure of CEOMarie-Christine Lombard, is now proposing the appointment of three new board members with directmanagerial experience in the industry. These are ex-TNT Express chief executive Alan Jones, who thefund said would make a good new board chairman, Thomas Delbrook, a former UPS head of mergers andacquisitions, and David Siegel, a former CEO at US Airways.
“These people know the business,” sources close to Jana Partners told CEP-Research. Theproposal was made in a December 22 letter to the supervisory board chairman, Antony Burgmans. Ifthe supervisory board does not back the addition of the three, then the fund plans to nominate themto replace three of the current six members.
Jana Partners, which together with Canada’s Aimco owns just over 5 per cent of TNT Express,criticises the company’s financial performance and strategy and claims that the supervisory boardis not monitoring the management properly. According to the sources, the fund does not believe thatthe company is strategically positioned to compete with its three larger rivals (DHL, UPS andFedEx) and accuses the management of ‘destroying value’.
Jana believes that the strategy of focusing for growth on emerging markets “has turned intoa huge distraction”, the sources said. “They need to be doing something about it but they haveproblems in Europe as well. Ideally there would be a quick fix but even if there was, they stillwould not be positioned to compete with the big players.”
Jana Partners came to prominence in December 2009 when it bought a 5 per cent holding in theformer TNT NV and campaigned for a split-up of the Dutch mail business and TNT Express to createshareholder value. Following months of speculation and despite initial management resistance, TNTNV went ahead with the demerger of the two businesses in May 2011.
Since then the share prices of both TNT Express and PostNL, which retained a 29.9 per centstake in TNT Express, have slumped heavily. As a result, PostNL was forced to make a €397 millionwrite-off in the value of its TNT Express stake in Q2, 2011, and a further €337 million in Q3,2011. It also announced it would pay out dividends in shares rather than cash from 2012 onwards.
PostNL spokesman Werner van Bastelaar told CEP-Research: “We are not happy about the valueof the TNT stock. It has a big impact on our results given our share in TNT Express. We already hada big impairment on the stock.” Asked about Jana Partners’ move to change the TNT Express board, hesaid: “For us at this moment there is no need for a change on the supervisory board.”
PostNL is seen as the decisive voice if some investors try to force through any changes atthe TNT Express shareholders meeting on April 11. Another investor, Canada-based MacKenzie Cundill,which holds about 4.5 per cent of TNT and 10 per cent of PostNL, has welcomed Jana Partners’ move,according to Dow Jones.
Asked to comment on the developments, TNT Express stated: “We understand that this questionis based on communication by some shareholders. As a policy we never elaborate on any communicationwith individual shareholders.”
