UPS buys TNT for $6.8bn

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United Parcel Service Inc. (UPS) has bought TNT for $6.8bn as part of its plans to further expand in the European region. The Georgia-based courier service is financing the deal with an equal mix of cash and debt. As per the agreement, UPS will pay TNT € 9.50 ($12.50) per share in cash which values TNT at approximately $6.79bn and creates a global leader in the logistics industry with more than $59.23bn in annual revenues. PostNL, the Dutch postal company that has a stake in TNT, has backed the deal.

Though TNT had earlier rejected a move, market watchers were expecting an acquisition anytime. The acquisition will create a customer-focused global platform that will be a leader in transportation technology and customer service.

European market is currently dominated by TNT and Germany’s DHL. With TNT acquisition, UPS will boost its presence in on the continent.

TNT’s European air network has a fleet of 50 aircraft that connects 65 destinations. It also operates a road freight network that connects all 38 European countries.

In a combined statement UPS and TNT Express said that “service lies at the heart of this proposed transaction”.

The benefits of the deal to UPS are not just limited to Europe. The deal will help UPS expand in emerging markets such as Asia-Pacific, especially China, where TNT has a vast delivery network.

Scott Davis, UPS chairman and CEO, said: “With this combination, both UPS and TNT Express will significantly enhance their ability to serve our combined customers’ complex global logistics needs.

The additional capabilities and broadened global footprint will support the growth and globalisation of our customers’ businesses. At the same time, this positions us for future growth, which will benefit our employees and share owners.”

Marie-Christine Lombard, TNT Express CEO, said: “This combination will significantly enhance the capabilities of two strong companies. I am convinced that together we will be the supplier and employer of choice in the express delivery industry.

“Our customers will greatly benefit from our enhanced combined service offerings. To my 77,000 colleagues I say that the combination will create unique opportunities for development and growth in which we can participate.”

In terms of package delivery, DHL is the dominant player, with more than 30% market share, followed by FedEx with 25%. UPS and TNT individually lag behind, however, with the merger their combined market share would be around 28%.

Sources: BBC, guardian.co.uk, Economic Times

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