Thursday, April 5, 2012

Explosive Deal

UPS acquires TNT Express, creating world’s largest carrier.

UPS is making a strong bid for global dominance in the world of package delivery. The company has reached agreement on a takeover bid for TNT Express, Europe’s second-largest delivery company, offering $6.8 billion in an all-cash deal that will create the world’s largest transportation provider, with over $60 billion in annual sales.

The UPS offer, increased after an initial offer was rejected, represents a 53 percent premium over Netherlands-based TNT’s closing price the day negotiations were announced. TNT management advised shareholders to accept the offer, and the company’s largest shareholder said it would tender its shares to UPS. TNT lost $225 million in the last quarter of 2011, and $350 million for the year.

If you have been worried what Brown would do with all the cash they have been pocketing, it’s nice to know they found something they wanted. They can afford it; at current rates of earnings, the $6.8 billion paid for TNT represents just over 18 months of UPS’s profits.

With the range of choices diminishing, both in LTL and especially now in small package shipping, it is more important than ever as a shipper to have an independent advocate whose interests are aligned with yours. UPS brings a lot to the table, but it’s a fair bet their solutions are going to involve using . . . UPS.

Kirk Shearer
800-989-0054 x103

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