The US package delivery company United Parcel Service (UPS) has reached an agreement to buy its Dutch rival TNT Express for €5.16bn, or €9.50 per ordinary share.
Hailed as one of the biggest deals in UPS’s history, the move will create a global leader in the logistics industry with more than €45bn in annual revenues and an enhanced and integrated global network.
UPS has long been trying to break into the European market, currently dominated by TNT and the Germany company DHL. The takeover is expected to help it expand in Europe, especially in the UK, France and Germany.
Scott Davis, chairman and CEO of UPS, 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.”
After the completion of the deal, around 36 per cent of UPS’s combined revenues will be generated outside the US.
Marie-Christine Lombard, CEO of TNT Express, 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.”
UPS estimates annual run-rate, pre-tax cost synergies of approximately €400m to €550m a year, achieved by the end of the fourth year after closing.
Neil Glynn of Credit Suisse said to Bloomberg: “I thought that a lot of shareholders would have accepted €9. I think UPS is paying a very, very big number. The synergies they’re seeing are pre-tax, it’s important to remember.”
The management and supervisory boards of TNT Express have accepted the deal, which is subject to Dutch disclosure requirements.
Morgan Stanley, UBS and Bank of America Merrill Lynch are acting as financial advisers to UPS; Goldman Sachs is acting as financial adviser to TNT Express.