UPS Would-Be Suitor for TNT

April 27, 2006
Scott Davis, CFO for parcel carrier UPS, commented during a conference call announcing the companys quarterly results that UPS could be about to embark

Scott Davis, CFO for parcel carrier UPS, commented during a conference call announcing the company’s quarterly results that UPS could be about to embark on a more aggressive acquisition strategy. Transport Intelligence reports that at the top of the UPS shopping list are international freight forwarding and package delivery companies. This sparked additional speculation that TNT, the Amsterdam-based express and mail carrier, could be a possible target.

Last year, UPS and FedEx were rumored to be considering U.K.-based third party logistics provider (3PL) Exel for acquisition, but if that was true, Deutsche Post beat them to the punch. Following the Deutsche Post announcement, both U.S. companies were said to be considering a counter bid, but none surfaced.

When Brinks announced it would sell its BAX Global subsidiary, Deutsche Bahn stepped forward with an unopposed offer and has added that operation to its Schenker forwarding operation.

Later, TNT announced it would divest of its logistics operations, but instead of speculation about a possible buyer for the logistics unit, speculation started that TNT itself might be a more attractive acquisition for the likes of UPS, FedEx, or other similar global companies. The European Court recently cleared a potential hurdle for interested parties when it ruled that the “golden share” provision TNT had put in place to protect it against a hostile takeover was not legal. By the time of the ruling, the point was all but moot for TNT, but it has established a EU position on such takeover defenses.

Though neither company is commenting directly on a possible acquisition, it appears likely that once a buyer for the logistics division is found, an announcement on the fate of the parent mail and express company could quickly follow.

TNT Express had revenues of 5.3 billion Euros ($6.57 billion) in 2005 and profits of 474 million Euros ($588 million). Total revenue for TNT in 2005 was 10.1 billion Euros ($12.5 billion). Its logistics unit provided a further 3.5 billion Euros ($4.3 billion) of revenue.

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