UPS announced that it’s in “constructive discussions” with TNT Express regarding its potential acquisition of the Dutch express and cargo delivery services firm. This development comes less than a month after TNT Express rejected UPS’ $6.4 billion acquisition offer.
“In line with regulatory requirements, UPS expresses it 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,” according to a statement posted on UPS’ website. “Further announcements will be made as appropriate.”
Cathy Roberson, a senior analyst at Transport Intelligence, worked at UPS for 10 years, and she said rumblings about an acquisition of TNT have been present for quite a while. When TNT spun off its express division, these rumors intensified. If a deal is ultimately to go through, she said, it will change the dynamic of the worldwide air cargo sector.
“It would be a major acquisition in the airfreight market, overall. The airfreight market has been hurting for quite a while, and we’re all expecting consolidation to occur,” she told Air Cargo World in February.
If UPS does acquire TNT Express, the deal could present at least one issue. Roberson pointed out that the combined company would likely claim a majority of the market in some European countries, triggering European antitrust laws. UPS could then either divest or would have to come up with a new plan for those countries. On the plus side, Roberson said, TNT has a broad South Asian road network, which would certainly give UPS a leg up in the Asian market.
Even though this is a smart deal for both parties, Roberson said TNT has to be careful about asking for too much. “I don’t see UPS really offering that much more,” she said in February. “UPS is more or less in the driver’s seat here.”