United Parcel Service (UPS) will pay €5.2 billion ($6.85 billion) for Dutch peer TNT Express in a deal making the world’s largest package delivery company the market leader in Europe.
UPS will also get access to TNT’s stronger networks in the fast-growing Asian and Latin American markets, bringing the US company’s global sales up to over €45 billion.
The deal has raised concerns that smaller companies will find it harder to compete. Germany’s Deutsche Post DHL , the closest rival in Europe, said the European Commission should examine the proposed takeover thoroughly.
TNT said on Monday its executive and supervisory boards unanimously supported UPS's offer of €9.5 per share, a premium of nearly 54%, up from an initial €9 per share last month.
TNT's biggest shareholder PostNL, which owns 29.8% also said it backed the offer, which UPS said it would finance through a combination of $3 billion in available cash and new debt.
“It's a difficult day and a great day. Difficult because TNT is a proud company and it is difficult to agree to be acquired,” said Marie-Christine Lombard, head, TNT Express.
{{/usCountry}}“It's a difficult day and a great day. Difficult because TNT is a proud company and it is difficult to agree to be acquired,” said Marie-Christine Lombard, head, TNT Express.
{{/usCountry}}“It's a great day because the combination of the two companies...will be enhanced and really deliver the global leader that will be unequalled.” TNT Express shares rose 1.5% to €9.5. The offer ends years of speculation about the future of the Dutch delivery company, which was split from the Dutch mail company PostNL and listed last year.
With falling profit and a poor outlook for 2012, TNT's management had come under intense pressure from activist shareholders, including Jana Partners and Alberta Investment Management Corp., to seek a buyer.
UPS has long looked at TNT as a way to help it expand in Europe, especially Britain, France and Germany. It said it was confident the European antitrust watchdog would clear the offer without going into a prolonged investigation.
But analysts said divestments might be needed to ensure the deal won the stamp of approval.
“We expect some divestments will be needed for the competition clearances,” DZ Bank analyst Robert Czerwensky said.
“We are early in the process. Way too early to talk about redundancies. We will look through the organization and figure out how to best put the network together,” said Scott Davis, CEO, UPS.