Speculation surged (again) Friday that UPS plans to buy TNT NV, Europe’s No.2 express-delivery service.
Amsterdam-based TNT’s stock rose nearly 7 percent after The Times (of London) reported the deal may be done as soon as this weekend.
The Times said UPS would pay 34 euros to 38 euros per share, though the paper did not cite a source. That would mean a bid in the range of $19 billion to $21.3 billion.
But on-again, off-again rumors have persisted for years that UPS or its chief rival, Memphis-based FedEx, was on the verge of buying TNT. It’s unclear whether the latest flare-up is real or investor speculation intended to trigger a TNT stock rally.
Sandy Springs-based UPS had little official comment. “UPS will never discuss rumors and speculation about mergers or acquisitions,” spokesman Norman Black said.
If it came to pass, the acquisition would be the company’s largest by far.
Recent news reports have been varied.
In July, The Financial Times reported FedEx had the deal tied up, giving TNT’s stock its biggest boost since the company went public in 1998.
Then in early August, European news agencies said that UPS would bid more than $15 billion for TNT.
UPS controls about 10 percent of the European express business and buying TNT would add about 15 percent, according Satish Jindel, president of SJ Consulting in Pittsburgh. It would also make UPS the No. 1 express carrier in Europe; German-owned DHL is first with 22 percent of the market.
The speculation coincides with a big UPS deal back home. DHL wants to outsource its North American air cargo shipments to UPS. That proposed deal is getting political scrutiny in Washington because it would result in the closure of a Wilmington, Ohio, air hub and critics have raised antitrust concerns. If completed, DHL would become a $1 billion-per-year customer of UPS.
Two U.S. analysts have been skeptical about recent reports of a TNT deal, though they said it would make sense for UPS or Fedex some day.
Jon Lagenfeld, a transportation/logistics analyst for Robert W. Baird & Co., wrote the following in a note to clients on Aug. 11: “Speculation emerges that UPS now [is] looking to acquire TNT. Speculation of a TNT takeout has persisted for years, so we hesitate to draw any conclusions; however, we believe the deal would be strategically positive for either FedEx or UPS. We believe FedEx needs TNT more than UPS, but UPS could afford to pay more.”
Baltimore-based analyst David Ross with Stifel Nicolaus completed the picture. “Ultimately,” he said in an interview Friday, “it might make sense for UPS or FedEx to acquire TNT to gain a stronger foothold in Europe. It makes more sense for FedEx because UPS has a stronger presence in Europe.
“We give no more credibility to this [rumor] than others,” said Ross, whose firm supplies investment banking services to both FedEx and UPS. If one of the American companies bought TNT, the success of the acquisition would depend upon the price paid and the integration strategy, he said.
Either carrier would probably want to sell TNT’s mail division, which is “non-core” to the express package delivery business, he said.
TNT started as a public mail company in the Netherlands. It has grown to compete with FedEx, UPS, DHL and CH Robinson Worldwide. TNT is in 200 countries, has more than 159,000 employees, and had revenues of Euros 11 billion in 2007 — or $16.28 billion in today’s dollars.
According to Ford Equity Research, TNT also has made some inroads into Asia. TNT has created a road network linking 120 cities in China, where UPS also is making significant investments.
Still, there is nothing convincing Ross that now is the time for UPS to strike.
“We don’t think the current market is any more or less favorable than the last few years,” he said.
UPS stock closed Friday at $63.52, a 2 percent gain.
Amsterdam-based TNT’s stock rose nearly 7 percent after The Times (of London) reported the deal may be done as soon as this weekend.
The Times said UPS would pay 34 euros to 38 euros per share, though the paper did not cite a source. That would mean a bid in the range of $19 billion to $21.3 billion.
But on-again, off-again rumors have persisted for years that UPS or its chief rival, Memphis-based FedEx, was on the verge of buying TNT. It’s unclear whether the latest flare-up is real or investor speculation intended to trigger a TNT stock rally.
Sandy Springs-based UPS had little official comment. “UPS will never discuss rumors and speculation about mergers or acquisitions,” spokesman Norman Black said.
If it came to pass, the acquisition would be the company’s largest by far.
Recent news reports have been varied.
In July, The Financial Times reported FedEx had the deal tied up, giving TNT’s stock its biggest boost since the company went public in 1998.
Then in early August, European news agencies said that UPS would bid more than $15 billion for TNT.
UPS controls about 10 percent of the European express business and buying TNT would add about 15 percent, according Satish Jindel, president of SJ Consulting in Pittsburgh. It would also make UPS the No. 1 express carrier in Europe; German-owned DHL is first with 22 percent of the market.
The speculation coincides with a big UPS deal back home. DHL wants to outsource its North American air cargo shipments to UPS. That proposed deal is getting political scrutiny in Washington because it would result in the closure of a Wilmington, Ohio, air hub and critics have raised antitrust concerns. If completed, DHL would become a $1 billion-per-year customer of UPS.
Two U.S. analysts have been skeptical about recent reports of a TNT deal, though they said it would make sense for UPS or Fedex some day.
Jon Lagenfeld, a transportation/logistics analyst for Robert W. Baird & Co., wrote the following in a note to clients on Aug. 11: “Speculation emerges that UPS now [is] looking to acquire TNT. Speculation of a TNT takeout has persisted for years, so we hesitate to draw any conclusions; however, we believe the deal would be strategically positive for either FedEx or UPS. We believe FedEx needs TNT more than UPS, but UPS could afford to pay more.”
Baltimore-based analyst David Ross with Stifel Nicolaus completed the picture. “Ultimately,” he said in an interview Friday, “it might make sense for UPS or FedEx to acquire TNT to gain a stronger foothold in Europe. It makes more sense for FedEx because UPS has a stronger presence in Europe.
“We give no more credibility to this [rumor] than others,” said Ross, whose firm supplies investment banking services to both FedEx and UPS. If one of the American companies bought TNT, the success of the acquisition would depend upon the price paid and the integration strategy, he said.
Either carrier would probably want to sell TNT’s mail division, which is “non-core” to the express package delivery business, he said.
TNT started as a public mail company in the Netherlands. It has grown to compete with FedEx, UPS, DHL and CH Robinson Worldwide. TNT is in 200 countries, has more than 159,000 employees, and had revenues of Euros 11 billion in 2007 — or $16.28 billion in today’s dollars.
According to Ford Equity Research, TNT also has made some inroads into Asia. TNT has created a road network linking 120 cities in China, where UPS also is making significant investments.
Still, there is nothing convincing Ross that now is the time for UPS to strike.
“We don’t think the current market is any more or less favorable than the last few years,” he said.
UPS stock closed Friday at $63.52, a 2 percent gain.
No comments:
Post a Comment