UPS has reached an agreement to acquire Dutch-based international delivery services company TNT Express, said UPS director of global media services Norman Black. TNT Express’s major shareholders have agreed on UPS’s all-cash offer at $6.8 billion. UPS expects the deal to close during the third quarter of 2012.
In acquiring one of its major international competitors, UPS will significantly bolster its global presence, adding major freight trucking networks in Western Europe, China and parts of Latin and South America. Additionally, UPS will also supply capital to stalled TNT Express projects. Black cited TNT’s attempt to build a shipping network in Brazil, which halted due to constraints on available resources.
“We see (the Brazil shipping network) as something that we can bring capital to and make it a reality,” Black said. “Our customers in the U.S. and all around the world will benefit from having a more robust UPS network in Brazil.”
When the deal closes, Black said that UPS expects a four-year integration process, during the course of which the TNT Express brand will continue to exist. “(After four years,) we expect to go to a common service portfolio, a common IT platform,” Black said. “You’ll see the TNT Express brand until we get to the final period after four years.”
It is currently too early to determine how specifically the merger will affect TNT Express’s staff, including CEO Marie-Christine Lombard, Black said.
“Assuming the deal closes and the shareholders accept it as we believe they will, we will put together an integration committee with management from both companies,” Black said. “This isn’t UPS dictating anything. We expect and need the input from some very smart TNT people.”
While UPS had been monitoring TNT Express for years, as they competed for business in Western Europe, the acquisition became possible due to a number of factors. The most notable factor, said Black, was the May 2011 de-merger from Dutch-based parcel service PostNL, which retained a 30% stake in the company.
Black listed other factors as well that catalyzed UPS’s acquisitions: “UPS is coming off a period of heavy capital investment, where we’ve accomplished investments we set out for ourselves over the last five to six years in building new hubs and modernizing our aircraft and airlines,” Black said. “There are still historically low interest rates, which will make UPS able to attain the portion of the money we’ll borrow to make this deal. But as much as anything, it’s recognizing in TNT that you’ve got a company with a very similar culture to ours that we believe will fit very well that will improve our position in Europe, South America and Asia.”
