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27 July 2006: |
| 26 May: TNT has said that it wants to sell its Logistics subsidiary, which has been up for sale for some time, for 1.15 billion euros - much higher than the recently estimated value of 1 billion eur. TNT has not commented on whether it has already found a buyer for its logistics operations. (Forbes.com, May 26, 2006) |
21 March 2006
Summary
The smallest of the big four integrators, the Netherlands-based TNT N.V. is the target of a takeover attempt. Responding to this pressure, TNT management announced its intentions to sell off its contract-delivery unit, TNT Logistics, which has suffered as competition eroded its margins and led to losses in Europe. It wants to concentrate on TNT Mail, the company’s postal unit, and TNT Express, its business-to-business freight-and-parcel delivery service, while announcing TNT Freight Management, with operations originating from Wilson Logistics Group, is not part of the sale.
TNT is the second largest logistics company in the world and employs about 36,000 workers. The company wants to complete the sale by mid 2006. An announcement may come as early as May 2006.1
Speculations increasingly focus on the Blackstone Group as a potential preferred buyer of TNT Logistics or the company as a whole. Blackstone is one the world’s largest the private equity firms. The transaction is subject to shareholder approval and Dutch worker consultation procedures.
Timeline and Players
In early December 2005, TNT management announced that it intends to spin off TNT Logistics and hired Goldman Sachs to advise on the deal. The logistics unit is valued at €1.3 billion ($1.6 billion). The announcement is seen as a defensive move to appease shareholders by spinning off the least profitable business section. TNT also announced a 1 billion Euro share buyback, resulting in a small boost to the share price.3
On January 16, 2006, Geber confirmed his intentions to assemble a bid team to make an offer for TNT, including TNT Logistics. The capital markets reacted favorably to this news. TNT’s shares have risen considerably since Geber announced his bid last year.4
Geber is known for his relationship to the US private equity group Blackstone, however he has not said whether Blackstone is part of his current investor group. Blackstone is closing the largest single private equity fund to date at $13 billion. No other consortium members have become public yet.
At the end of February, unnamed sources reported that Geber and Blackstone have abandoned plans to take over TNT. However, in mid-March renewed takeover speculation that Blackstone may be interested in buying the Dutch mail and logistics company led to a share price increase.
TNT Logistics Location Breakdown5
TNT N.V., Neptunusstraat 41-63, 2132 JA Hoofddorp, The Netherlands, Phone: +31-20-500-6000, Fax: +31-20-500-7000, http://www.tnt.com
The Netherlands-based TNT N.V. is a leading provider of express delivery and logistics services, ranking behind only UPS, FedEx, and DHL. TNT has evolved from being the public postal company in the Netherlands into an international group providing mail, express, freight management and logistics services. In 2005, it rebranded all its business to operate under the TNT name.
TNT has become the target of a takeover attempt. Responding to this pressure, TNT management announced its intentions to sell off its contract-delivery unit, TNT Logistics, which has suffered as competition eroded its margins and led to losses in Europe. It wants to concentrate on TNT Mail, the company’s postal unit, and TNT Express, its business-to-business freight-and-parcel delivery service, while announcing TNT Freight Management is not part of the sale.
TNT Express, the company’s biggest revenue producer, does most of its business in Europe. Like other express delivery companies, TNT is working to expand its presence in China. The company provides international mail services through its majority-owned Spring unit. Other shareholders in Spring include the UK's Royal Mail and Singapore Post.
TNT Mail is the primary mail delivery service in the Netherlands. The TNT Mail unit delivers documents, parcels, and other freight worldwide with a workforce of more than 40,000. TNT Mail is also working to develop Cendris, its data and document management business. In the Netherlands, TNT expects to face full competition for mail services by 2007.
TNT is expanding its operations in the UK, where it has won a long-term license to offer bulk mail services. It also provides bulk mail services in Austria, Belgium, the Czech Republic, Germany, Italy, and Slovakia. It has expanded its international operations through the acquisition of Sweden's Wilson Logistics Group, a provider of freight-forwarding operations in 28 countries.
Takeover speculations persist
"I expect a takeover bid for TNT to happen rather sooner than later," said Danny van Doesburg, an analyst at Amsterdam brokerage firm SNS Securities. Relatively free of debt with high growth margins and strong cash flow in the mail-and-express business, the company would make an attractive buy for a large strategic player, he said. He reckons €15 billion would be a good price for the company, implying a premium of more than 30% for shareholders.7
The Dutch Government plays a key role
The Dutch government is the “king maker.” It owns a 10% stake in TNT that developed out of the Dutch postal system. It also has a “golden share” which gives it special voting rights and the last word in any possible sale of the company.8
The Dutch government has said it would consider giving this “golden share” up once laws are in place to guarantee the public interest in a functioning postal system amid liberalization of the market.9
Dutch Unions’ Consultation Rights
Dutch codetermination laws give Dutch unions consultation and information rights during a corporate transaction. It is unclear whether these negotiations have started yet.10
Illegal tax actions at TNT
TNT recently announced it had concluded an independent inquiry into possible tax irregularities which had uncovered “illegal actions” at some of its subsidiaries, relating to the backdating of documents. The company estimated its total liability at between €150 million and €550 million for possible claims relating to its global-tax situation. A final tax settlement could take years but talks with tax authorities to determine a possible outcome have begun, according to CEO Bakker. He declined to say which countries are involved.11
1 TNT Press Release, December 6, 2005, available at
http://www.tntlogistics.com/en/press_office/
press_releases/archive_2005/20051206_tnt_announces
_sharpening_strategic_focus.asp
2 Financial Times, November 10, 2005
3 International Herald Tribune, December 7, 2005
4 Financial Times, November 10, 2005
5 TNT Analyst Presentation, December 6, 2006
6 Hoover's Company Records - In-depth Records,
March 21, 2006 and Wall Street Journal, March 6, 2006
7 Wall Street Journal, March 6, 2006
8 Reuters, January 16, 2006
9 Wall Street Journal, March 6, 2006
10 TNT Analyst Presentation, December 6, 2005
11 Wall Street Journal, March 6, 2006
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