UPS eyes TNT for a $15 billion acquisition

11 August 2008

The world's largest logistics company, United Parcel Service Inc, is said to be in early stage discussions to buy European's second-largest express-delivery company TNT NV for 10 billion euros ($15 billion).

Citing unidentified sources, the Sunday Telegraph reported that Morgan Stanley was advising UPS, which may divest TNT's postal division to a private-equity firm, or team up with a buyout firm for the acquisition.

Earlier in May UPS entered in to a 10-year deal with German postal service Deutsche Post AG's DHL Express, its US air cargo business, which though not quite combining operations, enables the two to share each others localised services. UPS  provides air transportation services for all of DHL express, deferred and international package volume within the US but not freight. UPS also provides air lift for DHL packages between the US, Canada and Mexico.

TNT was earlier said to have been in talks with FedEx, though the talks did not culminate in an offer from the US firm.

UPS is one of the most recognised and admired brands in the world, with a turnover of  $49.7 billion from its package delivery and specialised transportation and logistics services.

If the transaction materialises, it  would give the US-based UPS a full European air and road-delivery network, including TNT's air hub in Belgium, as well as a road operations centre in the Dutch city of Arnhem. TNT's revenue in 2007 totaled 11 billion euros.

Analysts say the combining of the two companies would gain through a combination of synergies and reduction of costs as soaring fuel prices have hurt global courier businesses.
 
Headquartered at Hoofddorp, TNT's networks are concentrated in Europe and Asia, but the group is expanding its operations worldwide, including in the Middle-East and South America.