The transaction will create a global logistics operation with more than $60 billion in annual revenues and an enhanced, integrated global network. It's UPS' biggest purchase to date, more than the 2005 acquisition of less-than-truckload company Overnite Corp. for about $1.25 billion, Bloomberg reported. The combined UPS-TNT entity should have an estimated 25% to 30% market share of the European small package market.
UPS raised its offering to 9.50 euros a share from an original offering of 9 euros a share. It was thought that FedEx might make a counteroffer, but the company chose not to, and TNT says it is unlikely they will make one now.
TNT's largest shareholder, PostNL N.V., holder of roughly 29.8% of the outstanding shares, has committed itself to supporting the UPS offer if and when it is made official. The agreement is likely to be finalized in the second quarter of 2012.
"With this combination, both UPS and TNT Express will significantly enhance their ability to serve our combined customers' complex global logistics needs," says Scott Davis, UPS chairman and CEO. "The additional capabilities and broadened global footprint will support the growth and globalization of our customers' businesses. At the same time, this positions us for future growth, which will benefit our employees and shareowners."
Stifel Nicolaus Transportation & Logistics Research Group says although it believes this will be "a long-term strategic win for UPS, the integration challenges should not be overlooked, as network integrations rarely, if ever, go as planned."