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UPS Rumored to Bid For TNT
TNT shares wavered throughout day, following a report that UPS would buy the company and exec’s denial.
August 11, 2008
An unnamed source said United Parcel Service Inc. is in talks to acquire TNT N.V., an Amsterdam, Netherlands-based delivery service company.
The U.K.-based Sunday Telegraph reported that UPS would launch a 10 billion euros ($15 billion) bid for TNT. In an interview with Reuters on Monday, UPS’ president of international business Dan Brutto, dismissed the report as a “rumor” and said that a TNT buy would devalue its shares.
Meanwhile, TNT shares jumped, fell, then rose again amidst mixed messages coming from UPS. In a note obtained from Thomson ONE Analytics, Jefferies analysts Christopher Combe and Ali Karimi noted that merger progress between UPS and TNT “could bring FedEx into the fray.”
In speaking with MergersUnleashed, Combe said that in the past FedEx "has really not allowed UPS to get too far ahead of it in market expansions," particularly with express service expansion. In January 2004, FedEx acquired Kinko’s in order to expand into the retail arena, following a UPS takeover of Mailboxes, Etc. in March 2001. In addition, in a move to build a focus on ground presence, FedEx acquired Caliber System in October 1997 and American Freightways in February 2001.
Last week, Jefferies downgraded TNT, before reports of the potential UPS bid emerged.
The speculation of a possible bid for TNT speaks to a larger trend of consolidation within the industry, and also underscores the eagerness of many U.S., companies to expand outside of the U.S. Combe commented, “Getting more exposure to these fast-growing economies is a positive.”
At press time midday, TNT shares were at $25.15, following a high of $28.09 and a low of $22.82.
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