UPS and TNT Express today jointly announce that they have reached agreement on a recommended all-cash public offer of € 9.5/sh by UPS for TNT Express. TNT Express’ Executive and Supervisory Boards unanimously intend to support and recommend the Offer.
The combination of UPS and TNT Express will create a global leader in the logistics industry, with annual revenues of more than € 45bn and will deliver significant benefits for the shareowners, customers, employees and other stakeholders of both companies.
Cost synergies
UPS currently estimates annual run-rate pre-tax cost synergies of approximately € 400-550m a year (€ 368-504m KBCSe), achieved by the end of the fourth year after closing. UPS believes that the cumulative pre-tax implementation costs related to achieving these synergies will be approximately € 1bn (€ 0.7-1.0bn KBCSe) over the four-year integration period.
The Executive and Supervisory Boards of TNT Express believe this transaction is in the best interests of the company and its stakeholders and intend to support and unanimously recommend the Offer for acceptance to TNT Express’ shareholders
Irrevocable from PostNL
PostNL, holder of approximately 29.8% of the outstanding shares of TNT Express, has committed itself to tender its shares under the offer if and when made. The irrevocable commitment contains certain customary undertakings and conditions.
Competing Offer
UPS and TNT Express may terminate the merger protocol in the event that a bona fide third-party offers or makes an offer which is binding upon such party, exceeds the Offer Price by at least 8% and is considered by the Executive and Supervisory board of TNT Express to be substantially more beneficial to TNT Express. In the event of a competing offer, UPS will be given the opportunityto match such offer, in which case the merger protocol may not be terminated by TNT Express. TNT Express has entered into customary undertakings not to solicit offers from third parties.
To date the main second contender for TNT Express, , has not given any indication of making an offer.
Conclusion
The € 9.5/sh all-cash public offer is broadly in line with our € 9.7/sh TP which includes similar cost synergies as those targeted by UPS. We lower our TP to € 9.5/sh.
Today at 1:30pm CET an analyst and investor call will be held.