Transportation: UPS to Buy TNT Express for $6.77B image

-UPS makes agreed EUR9.50 a share offer.

United Parcel Service Inc. – UPS on Monday said it has reached an agreement to acquire Dutch rival TNT Express NV for $6.77 billion (€5.16 billion), creating a dominant package-shipping operation in Europe.

“The transaction will recreate a global leader in the logistics industry with more than €45 billion in annual revenues and an enhanced, integrated global network,” the companies said in a statement.

Expanding in Europe at a time it is suffering from slow economic growth or recession shows UPS’s “long-standing commitment to Europe,” Kuehn said.

The Atlanta-based logistics giant expects to improve TNT’s performance and estimates cost synergies of around EUR400 million to EUR550 million a year. It will cost approximately EUR1 billion to realize these benefits over a four-year integration period, UPS said.

The deal allows UPS to take out a European rival that has shown a willingness to undercut competitors on price and gain a stronger position in growth markets Asia and Latin America.

On Feb. 21, TNT reported a loss of €173 million ($229 million) for the fourth quarter, including a €104 million charge on its Brazilian arm and another €45 million to write down the value of its airplane fleet. Revenues rose 2.8 percent to €1.85 billion ($2.5 billion).

UPS’s cash offer of €9.50 a share for TNT, which is Europe’s second-largest express delivery company behind DHL, comes a month after TNT turned down a nine euro-per-share offer. The companies remained in talks.