UPS Remains In Discussions With TNT Express To Purchase Company


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UPS Remains In Discussions With TNT Express To Purchase Company

By Mike Mitchell

March 18, 2012 - UPS remains in constructive discussions with TNT Express N.V. regarding a potential transaction to acquire the entire issued share capital of TNT Express. Back on February 11, UPS made an unsuccessful bid of $6.4 billions of TNT Express. 

In line with regulatory requirements, UPS expresses it still has the intention to submit a request for approval of its offer document to the Netherlands Authority for the Financial Markets (AFM) within 12 weeks (by May 11 at the latest) from its initial announcement of Feb. 17, 2012. UPS and TNT Express have ruled out a potential counter bid from FedEx Corp. 

In response to the announcement from TNT Express NV, UPS confirms that, on February 11, 2012, following discussions with TNT, it made a revised, increased and comprehensive proposal to acquire the entire issued share capital of TNT for EUR9 per share in cash.

Discussions between the parties concerning this proposal are ongoing, although there is currently no certainty that any agreement will be reached. TNT Express N.V. is an international express and cargo delivery services company with headquarters in Hoofddorp, Netherlands. The firm has fully owned operations in 65 countries and delivers documents, parcels and pieces of freight to over 200 countries. The company recorded sales of over ?7.2 billion in 2011. 

Formerly an operating division of TNT N.V., TNT Express was demerged from its parent company on 26 May 2011, taking a listing on the Euronext Amsterdam Stock Exchange. TNT N.V. subsequently renamed itself PostNL. 

Its major competitors include FedEx, United Parcel Service (UPS) and DHL. TNT Express aircraft operate under the IATA code of TAY (TNT Airways). The company operates road and air transportation networks in Europe, the Middle East and Africa, Asia-Pacific and the Americas. It employs 77,000 people and runs a fleet of 30,000 road vehicles and 46 aircraft. 

United Parcel Service, Inc., typically referred to by the acronym UPS, is a package delivery company. Headquartered in Sandy Springs, Georgia, United States, UPS delivers more than 15 million packages a day to 6.1 million customers in more than 220 countries and territories around the world. UPS is well known for its brown trucks, internally known as package cars (hence the company nickname "The Big Brown Machine"). UPS also operates its own airline based in Louisville, Kentucky. 


Historically, the bulk of UPS's competition came from inexpensive ground-based delivery services, such as Parcel Post (USPS) or Choice Logistics. But in 1998 FedEx expanded into the ground parcel delivery market by acquiring RPS (originally Roadway Package System) and rebranding it as FedEx Ground in 2000.  

In 2003 DHL expanded its US operations by acquiring Airborne Express, significantly increasing its presence in the United States, and adding more competition in the ground delivery market. In response to this, UPS partnered with the US Postal Service to offer UPS Mail Innovations, a program that allows UPS to pick up mail and transfer it to a USPS center, or destination delivery unit (DDU), for final distribution. This process is also known as zone skipping, long used by Parcel Consolidators. 

More recently, the continued growth of online shopping, combined with increasing awareness of the role transportation (including package delivery) has on the environment, has contributed to the rise of emerging competition from niche carriers or rebranded incumbents. For instance, the US Postal Service claims "greener delivery" of parcels on the assumption that USPS letter carriers deliver to each US address, six days a week anyway, and therefore offer the industry's lowest fuel consumption per delivery. 


Other carriers, like ParcelPool which specializes in residential package delivery to APO-FPO addresses, Hawaii, Alaska, Puerto Rico and other US Territories, arose in response to increased demand from catalog retailers and online e-tailers for low-cost residential delivery services closely matching service standards normally associated with more expensive expedited parcel delivery.

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