UPS expects acquisition of TNT to be completed by early 2013

Following their August announcement that the offer period for UPS’s $6.28 billion acquisition of Netherlands-based TNT NV, a provider of mail and courier services and the fourth largest global parcel operator would be extended from its original expiration date of August 31 to November 9, UPS said yesterday that the extension of the Offer Period has been made official in the form of a regulatory announcement.

UPS and TNT officials said that the Offer Period “has been extended because not all conditions for completion of the Offer, in particular the condition on competition clearance, were fulfilled upon the expiry of the initial Offer Period on August 31, 2012.”

And the companies also stated that they mutually consented to a request from the European Commission to extend the review period for another 10 working days to enable the Commission to fully review additional items related to the transaction.

With this extension, UPS and TNT said they anticipate completion of the Offer and the transaction to close in early 2013. Should it not be completed by the time the Offer Period expires, they said an exemption will be requested by the Netherlands Authority for the Financial Markets to again extend the Offer Period.

This development follows a joint statement issued by the companies in August, which stated that conditions for the offer to be completed—specifically the European Union (EU) antitrust condition—would not be met by the initial August 31 expiration date.

A Bloomberg report published in July said that EU regulators extended their review of UPS’s bid to acquire TNT by ten working days until December 12. According to the report, the EU did not specify the reason for the delay which was signaled in an online filing on July 27. It added that the time limit for regulatory review of deals can be prolonged at the request of companies.

And in mid-July UPS said that the European Commission’s review of the proposed acquisition were to move to a “Phase II review,” because there are facets of the deal that require more time to analyze.

UPS and TNT said that this “transaction will create a global leader in the logistics industry with more than $60 billion in annual revenues and an enhanced, integrated global network.”

As previously reported, the joint synergies expected to result from this deal, according to UPS and TNT include:
-the complementary strengths of both organizations creating a customer-focused global platform that will be a leader in transportation technology and customer service;
-TNT Express customers benefiting from UPS’s unparalleled access to the North American market as well as access to its logistics solutions, such as global freight forwarding and distribution capabilities; and
-UPS customers will benefit from access to expanded express and road freight capabilities in Europe and broader capabilities in fast-growing regions such as Asia-Pacific and Latin America.

“We intend to leverage the strengths of both companies to enhance the combined growth portfolio and believe all stakeholders will benefit,” said UPS Chairman and CEO Scott Davis on an investor call in March. “UPS possesses a large U.S. presence, as well as experience in global supply chain management. TNT Express provides additional small package access points in Europe, the most extensive European express road network, and an expanding presence in emerging markets.”

Over the years, TNT has grown into a highly respected $7.25 billion euro company with diverse revenue streams from around the world with operations in more than 200 countries in Europe, the Middle East, Asia Pacific and Latin America, said UPS CFO Kurt Kuehn on the March investor call. And he added TNT has a substantial group of assets, including aircraft, vehicles, hubs, and depots, which cumulatively account for about 1 million deliveries per day handled by its 77,000 employees. IN 2011, TNT had a net loss of $270 million euro and $7.2 billion euro in revenue.