U.S. logistics company UPS has approached TNT Express about a possible takeover, reigniting on-off talks about a bid for the Dutch delivery company which faces pressure from shareholders after a drop in its share price.
After many years of speculation about a tie-up between the two, the potential offer from UPS may value the Dutch delivery company around €9 ($11.84 U.S.) a share or close to €5-billion, two people familiar with the talks said.
While a price has not yet been agreed, analysts have estimated that a strategic bidder for TNT Express would pay €9 to €10 a share. TNT Express shares were trading at €6.36 on Friday, up 2.9 per cent.
The TNT board was set to consider the UPS approach early next week, the people said, but cautioned that talks could still fall apart, as they had in the past.
UPS and TNT Express declined to comment.
The deal, if successful, would highlight interest by global companies in taking advantage of the fall in European share prices in the wake of the sovereign debt crisis, which has depressed valuations of coveted targets. The combination would increase UPS’ presence in Europe but would also give the U.S. company a domestic network in China, where it has been keen to expand.
TNT has in the past also been pursued by FedEx in 2008.
In recent days TNT Express has been caught up in an open feud with a group of activist shareholders, led by U.S. hedge fund Jana Partners, rejecting their request to appoint three new directors.
Jana Partners, which together with Alberta Investment Partners owns 5 per cent of TNT Express, was the driving force behind a shareholder revolt that led to the breakup of the former TNT into TNT Express and Dutch postal company PostNL last May. With other shareholders, it is now pressing for TNT Express to be groomed for a takeover by a larger rival, such as UPS or FedEx.
When TNT Express was spun off last year, its shares were trading at around €9. PostNL holds a 29.9-per-cent stake in TNT.
Several large shareholders surveyed by the Financial Times have said an offer of €9 would be acceptable to them.
Analysts at Wall Street research boutique Wolfe Trahan & Co. recently called UPS and FedEx the most logical buyers of TNT Express. “We believe the separation of Express from Mail earlier this year could finally entice a strategic buyer to emerge,” they noted in a report. “We now estimate a €9 to €10 takeout price in our buy-out analysis, down from our prior expectations of €10 to €11.”
TNT in recent months warned on profits, citing low demand on Europe-Asia routes, cost-conscious customers in Europe and continued losses in the Americas.
Earlier this week, UPS announced its planned takeover of Kiala, the Belgian e-commerce company, which was estimated to be worth around €100-million.
Additional reporting Matt Steinglass and Jeremy Lemer