UPS may be looking to acquire TNT, according to reports
News follows rumors of FedEx possibly acquiring global parcel integrator
Jeff Berman, Group News Editor -- Logistics Management, 8/11/2008
Less than a month after media reports coming of Europe suggested FedEx was in talks to buy TNT, a Netherlands-based provider of mail and courier services and the fourth-largest global parcel operator, a new rumor regarding another potential suitor for TNT is afloat, according to a report from the Sunday Telegraph in
The publication reported earlier today that UPS has made an offer to TNT for roughly $15 billion to acquire the company, adding that they are “understood to be in early-stage talks.”
This news comes less than a month after it was speculated that UPS rival FedEx and TNT were in talks regarding a potential acquisition. At that time, the Financial Times reported that if that deal were to go through, it would have a significant impact on FedEx’ European parcel network operations, where its presence and market share is far less than TNT’s in Europe. The FT added that factors such as a poor economy and escalating fuel prices have hindered demand for package deliveries, resulting in TNT merger talks that have occurred from time to time over the years.
But JP Morgan analyst Thomas R. Wadewitz wrote in a research note last month that he would not expect UPS to allow FedEx to buy TNT without a fight. And, if these reports regarding UPS getting into the mix for TNT are true, it appears that may be precisely what has happened.
Today’s Sunday Telegraph report also noted that FedEx has not ruled itself out of bidding for TNT. The publication also said it is understood that FedEx has previously expressed an interest in TNT's parcel division but is less keen on its slower-growing postal division. And sources cited in the article suggested UPS may consider offloading the postal arm of the business to a third-party bidder.
The possibility of FedEx buying TNT has been rumored for a long time, and it began re-circulating again in mid-May, according to Jerry Hempstead, president of Hempstead Consulting, in a July interview.
“It could be viewed as a way for FedEx to respond to DHL’s partnering up with UPS, said
On May 28, DHL Express parent company Deutsche Post World Net unveiled its plan to work with UPS on a 10-year, $10 billion contract for airlift capacity in an effort to reduce its ground infrastructure operations costs. The plan is expected to go into action later this year once the contract is finalized. But there are now some potential delays looming with this deal, with
Regardless of whom may acquire TNT, Robert W. Baird analyst John Langenfeld said in a research note that the deal would be a “good strategic fit” for either FDX, which has minimal intra-European share or UPS in order to leverage its existing No. 4 position in
“Either way, the deal would likely be a positive for the industry, representing yet another layer of consolidation going from four to three global integrators,” said Langenfeld. “In our view, inclusion of TNT's mail division (roughly half the business) in the transaction would be an incremental negative for either company.”
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