UPS Acquiring TNT Express For $6.77 Billion

UPS Acquiring TNT Express For $6.77 Billion
See page for author [Public domain], via Wikimedia Commons

UPS Acquiring TNT Express For $6.77 Billion

Last week I wrote about the possibility of a UPS (NYSE:UPS) buyout of TNT Express (AMS:TNT).  I cited a number of positives for UPS and TNT shareholders. United Parcel Service, Inc. (NYSE:UPS) would gain further control in Europe while TNT (AMS:TNT) shareholders will get some value out of their holding.  Overall I considered the possibility of a buyout to be very positive.  It is also note worthy that this is the largest acquisition made by UPS in the company’s 104 year history.

On Monday, news broke that TNT finally accepted UPS’s proposal after previously turning down the offer.  As of now the deal says that UPS has acquired TNT Express for $6.77 billion.  That is a 54% premium to the close on February 16th.  Post NL NV who has a 29.8% control over TNT Express has said they will vote for the deal.

Seth Klarman Describes His Approach In Rare Harvard Interview

Seth KlarmanIn a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More

It is expected that the deal will create a shipping network in Europe capable of reeling in $60 billion annually.  Also, this will bump up UPS’s revenue outside of the US from 26% to 36%.  However, the benefits aren’t limited to Europe.  UPS will be able to strengthen its networks in high-growth, Asian and Latin American markets.  Analysts are saying that this buyout wasn’t so much an investment intended for the European markets but rather the emerging market countries such as China, Middle East, Latin America, Australia, etc.

There is some downside to the deal and the main unpleasant point of the deal was the cost.  UPS paid a hefty price for TNT Express which may hurt in the short term but will yield great results over the long term.  Next, if the European debt crisis worsens then UPS could be out a nice chunk of change.  However, UPS has a dominating role over the marketplace.  In Europe, for instance, Fedex only has a market share of 3% and UPS intends on investing 1 billion additional euros over a period of four years to further integrate and expand TNT.

As I had previously speculated, this deal is going to do wonders for UPS’s business over the long term.  I am not 100% excited that they paid such a huge premium but ultimately when we look back at this deal, I think we will say that it was worth it.  There is just so much growth here for UPS now in emerging markets that I believe the premium was worth it.

Updated on

Sheeraz is our COO (Chief - Operations), his primary duty is curating and editing of ValueWalk. He is main reason behind the rapid growth of the business. Sheeraz previously ran a taxation firm. He is an expert in technology, he has over 5.5 years of design, development and roll-out experience for SEO and SEM. - Email: sraza(at)
Previous article The Economic Impact of The “Arab Spring” Uprisings
Next article Goldman Sachs (GS) Former Partner Writes Response To Greg Smith

No posts to display