UPS $6.4 Billion Bid for TNT Express Rejected
By Natalie Doss and Alex Webb - Feb 17, 2012 10:26 PM GMT+0100
Enlarge image TNT Express Gets Unsolicited EU9/Shr From UPS; Rejects Offer
A TNT NV Boeing 747 cargo plane is unloaded at Liege Airport in Grace-Hollogne, Belgium. Photographer: Jock Fistick/Bloomberg
United Parcel Service Inc. (UPS) is persevering in negotiations to buy Europe’s second-largest package-delivery company, TNT Express NV (TNTE), after its $6.43 billion offer was refused.
The supervisory and executive boards at TNT turned down the “highly conditional” offer of 9 euros a share, 42 percent more than today’s closing price in Amsterdam, according to a statement from the Hoofddorp, Netherlands-based company. Atlanta-based UPS confirmed that discussions were continuing.
“There’s pressure on TNT now to not let this go,” said David Campbell, an analyst at Thompson Davis & Co. in Richmond, Virginia. “It’s not going to stop.”
A bid by UPS or FedEx Corp. (FDX) has been the subject of speculation for years as the U.S. companies study expansion in Europe. TNT was spun off from Dutch postal operator TNT NV in May, and the former parent, now named PostNL NV, (TNTE) retains 29.9 percent of the company, according to data compiled by Bloomberg.
The offer valued TNT at 1.04 times total assets, compared with a median multiple of 0.58 in 33 acquisitions of transportation services companies in Western Europe in the past 10 years, Bloomberg analysis shows. The 42 percent premium compares with an average of 15 percent in more than 270 deals in the same period.
TNT rose 2.6 percent to 6.34 euros in Amsterdam, before the talks were disclosed. Its American depositary receipts jumped 55 percent, the most since the spinoff, to $12.57 at the close in New York, while UPS was unchanged at $76.76.
FedEx, the operator of the world’s largest cargo airline and No. 2 in package deliveries behind UPS, slid 2.1 percent to $92.99.
UPS’s offer reflects TNT’s undervaluation after the spinoff, enabling the U.S. company to make “one of the most opportunistic bids of the decade,” said James Rasteh, president of New York-based investment fund White Eagle Partners LLC. He said White Eagle holds a TNT stake of less than 1 percent.
Fair value for the stock would be more than 15 euros a share, Rasteh said in an interview.
“This merger would put UPS in an undisputed leadership position in Europe, China, Russia, Brazil and India -- all of which have higher structural growth potential than North America,” he said.
Spokesmen for PostNL, TNT’s largest investor, and Jana Partners, the third-largest, declined to comment.
TNT cut its 2011 target operating margin for Europe, the Middle East and Africa to 8 percent to 9 percent in October from an earlier target of 9 percent or more.
The company, which plans to report full-year earnings on Feb. 21, posted a net loss of 97 million euros for the first nine months of 2011 compared with a profit of 62 million euros a year earlier. TNT is in the midst of a 50 million-euro program to reduce “indirect costs.”
UPS’s offer, made Feb. 11, was revised and increased following discussions with TNT, the company said in a statement. Peggy Gardner, a UPS spokeswoman, declined to comment beyond the statement.
“It absolutely makes sense for UPS to consider a ‘low-ball bid’ for TNT Express, especially with the euro down versus the dollar,” said Jeff Kauffman, an analyst at Sterne Agee & Leach in New York.
Would-be suitors are unlikely to pay a price in the mid- teens right now, Kauffman said.
FedEx would benefit more from a purchase of TNT because its Europe market share is smaller, according to Lee Klaskow, a Bloomberg Industries analyst in Skillman, New Jersey.
Jess Bunn, a spokesman for Memphis, Tennessee-based FedEx, declined to comment, citing a company policy against discussing “corporate development matters.”
UPS completed the purchase this week of Brussels-based delivery firm Kiala to bolster operations in Belgium, France, the Netherlands, Spain and Luxembourg, and the company has done several so-called bolt-on acquisitions in recent years, said Thompson Davis’s Campbell, who recommends buying UPS and FedEx.
“UPS is in Europe for the long term, and it would take them years to duplicate what TNT already has,” Campbell said. “In the meantime TNT isn’t going to go away as a competitor and would be fighting back.”
FedEx zou dus meer baat hebben bij een overname van TNT Express en een houder van minder dan 1% van de aandelen noemt een fair value van 15 euro, dat lijkt mij wel heel erg optimistisch.
Met 15 euro zou het belang wat postNL heeft per aandeel postNL al 7 euro zijn en dan heb je de 50ct winst per aandeel gratis.