UPS Still In Takeover Talks With TNT Express

U.S. delivery company United Parcel Service Inc. (NYSE: UPS), the world's largest package-delivery company, said Friday it is in talks to buy Dutch rival TNT Express NV and reiterated its intention to make a formal bid by May 12.

UPS remains in constructive discussions with TNT Express N.V. (AMS:TNTE) regarding a potential transaction to acquire the entire issued share capital of TNT Express, the Atlanta-based company reported in a statement.

TNT, Europe's second-largest express delivery company, rejected an informal offer by UPS of €9 per share ($11.75) on Feb. 11, which valued the company at approximately €4.9 billion. This was after UPS approached TNT with its first offer of €8.25 a share in November.

UPS representatives said the company still has the intention to submit a request for approval of its offer document to the Netherlands Authority for the Financial Markets within 12 weeks from its initial announcement of Feb. 17, 2012. But the company did not mention a price.

The deal could produce more than €400 million in synergies for UPS due to overlapping operations, particularly in Europe, Bloomberg News reported, citing Amsterdam-based Kepler markets analyst Andre Mulder.

This is a once-in-a-lifetime opportunity, Mulder told Bloomberg. Of the four major players globally, TNT is the smallest one, so it's the last opportunity.

UPS had 7.7 percent of the European express-parcels market in 2010, compared to FedEx's 3.3 percent and TNT's 9.6 percent, according to Transport Intelligence. Deutsche Post AG (ETR: DPW)'s DHL unit was the biggest player in the region, with a 17.6 percent market share.

The combination would increase UPS' presence in Europe, while also giving the U.S. company a domestic network in China, where it has been keen to expand.

TNT announced last month it had suffered a net loss of €173 million in the fourth quarter of 2011 and will retreat from its global ambitions and focus on Europe.

UPS and TNT have both ruled out a potential counter-bid from FedEx Corporation (NYSE: FDX), sources told Reuters.

Given TNT's poor performance and the absence of a counter-bidder, UPS is unlikely to increase its €9 offer by a lot.

Shares of United Parcel Service Inc. (NYSE:UPS) fell 0.03 percent to $78.92 a share in early Friday morning trading. FedEx Corporation (NYSE:FDX) shares lost 0.12 percent and TNT Express NV (AMS:TNTE) shares rose 0.56 percent to 9.28 a share.

TNT will hold its annual meeting on April 11.