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UPS in Talks With TNT Over $15 Billion Takeover, Telegraph Says
By Martijn van der Starre
Aug. 10 (Bloomberg) -- United Parcel Service Inc., the world's largest package-delivery company, held initial talks to buy TNT NV for 10 billion euros ($15 billion), the Sunday Telegraph said, citing unidentified people.
Soaring fuel costs have hurt global courier businesses hard and falling share prices have made consolidation more compelling, the London-based newspaper said.
``It's our policy not to comment on such market rumors,'' Pieter Schaffels, a spokesman for Hoofddorp, Netherlands-based TNT, said when contacted by Bloomberg News.
Buying Europe's second-biggest express-delivery service would give UPS, based in Atlanta, a full European air and road- delivery network, including an air hub in Liege, Belgium, and a trucking center in the Dutch city of Arnhem. TNT's revenue in 2007 totaled 11 billion euros.
``The rationale is very logical,'' Corne van Zeijl, a senior portfolio manager at SNS Asset Management in Den Bosch, the Netherlands, who oversees about 800 million euros and owns TNT shares. The revenue gains and cost savings from a possible takeover of TNT by UPS ``will be rather big.''
UPS is being advised by Morgan Stanley and may plan to sell TNT's postal division to a private-equity buyer, or team up with a buyout firm for the acquisition, the Sunday Telegraph said. TNT is being advised by Goldman, Sachs & Co., the newspaper said.
TNT rose 59 cents, or 2.4 percent, to 25.36 euros in Amsterdam on Aug. 8. The shares have dropped 10 percent this year, valuing the company at 9.34 billion euros. UPS added $2.44, or 3.9 percent, to $65.70 in New York. Its stock has dropped 7.1 percent in 2008, valuing the carrier at $67.3 billion.
No Comment
TNT surged 26 percent on July 14 after the Financial Times reported it was in preliminary talks with U.S. competitor FedEx Corp. It fell 16 percent, the most in 10 years of Amsterdam trading, on July 24 after the Wall Street Journal said the talks didn't lead to Memphis, Tennessee-based FedEx making an offer.
UPS has considered buying TNT in the past, the Journal said at the time. TNT and FedEx declined to comment on the reports.
UPS agreed in May to take over Deutsche Post AG's U.S. air shipments to help cut costs and restore Germany's biggest postal service's DHL Express U.S. unit to profitability. UPS estimated the 10-year deal with Bonn-based Deutsche Post would boost annual revenue by as much as $1 billion.
TNT, the Netherlands' biggest letter-delivery service, said July 28 second-quarter net income dropped 16 percent to 205 million euros, short of analyst estimates, and said 2008 sales and margins will be at the low end of forecasts. Revenue rose 4.5 percent to 2.81 billion euros in the quarter.
To contact the reporter on this story: Martijn van der Starre in Amsterdam at [email protected]
Last Updated: August 10, 2008 09:54 EDT
By Martijn van der Starre
Aug. 10 (Bloomberg) -- United Parcel Service Inc., the world's largest package-delivery company, held initial talks to buy TNT NV for 10 billion euros ($15 billion), the Sunday Telegraph said, citing unidentified people.
Soaring fuel costs have hurt global courier businesses hard and falling share prices have made consolidation more compelling, the London-based newspaper said.
``It's our policy not to comment on such market rumors,'' Pieter Schaffels, a spokesman for Hoofddorp, Netherlands-based TNT, said when contacted by Bloomberg News.
Buying Europe's second-biggest express-delivery service would give UPS, based in Atlanta, a full European air and road- delivery network, including an air hub in Liege, Belgium, and a trucking center in the Dutch city of Arnhem. TNT's revenue in 2007 totaled 11 billion euros.
``The rationale is very logical,'' Corne van Zeijl, a senior portfolio manager at SNS Asset Management in Den Bosch, the Netherlands, who oversees about 800 million euros and owns TNT shares. The revenue gains and cost savings from a possible takeover of TNT by UPS ``will be rather big.''
UPS is being advised by Morgan Stanley and may plan to sell TNT's postal division to a private-equity buyer, or team up with a buyout firm for the acquisition, the Sunday Telegraph said. TNT is being advised by Goldman, Sachs & Co., the newspaper said.
TNT rose 59 cents, or 2.4 percent, to 25.36 euros in Amsterdam on Aug. 8. The shares have dropped 10 percent this year, valuing the company at 9.34 billion euros. UPS added $2.44, or 3.9 percent, to $65.70 in New York. Its stock has dropped 7.1 percent in 2008, valuing the carrier at $67.3 billion.
No Comment
TNT surged 26 percent on July 14 after the Financial Times reported it was in preliminary talks with U.S. competitor FedEx Corp. It fell 16 percent, the most in 10 years of Amsterdam trading, on July 24 after the Wall Street Journal said the talks didn't lead to Memphis, Tennessee-based FedEx making an offer.
UPS has considered buying TNT in the past, the Journal said at the time. TNT and FedEx declined to comment on the reports.
UPS agreed in May to take over Deutsche Post AG's U.S. air shipments to help cut costs and restore Germany's biggest postal service's DHL Express U.S. unit to profitability. UPS estimated the 10-year deal with Bonn-based Deutsche Post would boost annual revenue by as much as $1 billion.
TNT, the Netherlands' biggest letter-delivery service, said July 28 second-quarter net income dropped 16 percent to 205 million euros, short of analyst estimates, and said 2008 sales and margins will be at the low end of forecasts. Revenue rose 4.5 percent to 2.81 billion euros in the quarter.
To contact the reporter on this story: Martijn van der Starre in Amsterdam at [email protected]
Last Updated: August 10, 2008 09:54 EDT