Acting up

19 Mar 2012 By Quentin Webb

The Dutch courier’s $6.8 bln sale to UPS is a rare victory for activist investors after a lean patch in Europe. They are likely to score again with the $2 bln buyout of Britain’s Misys. Corporate stragglers: beware. Results like these will embolden troublemakers.

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On March 19, United Parcel Service said it agreed to buy Dutch rival TNT Express for 5.2 billion euros in cash, in a deal backed by TNT’s supervisory and executive boards and its largest shareholder, PostNL.
UPS will finance the purchase with $3 billion of available cash and new debt.
UPS will pay 9.50 euros a share for TNT. The price is 50 cents a share, or 5.6 percent, more than an earlier proposal of 9 euros a share that TNT disclosed on Feb. 17 and rejected. The sweetened price represents a 53.7 percent premium to TNT’s share price on Feb. 16, the two companies said.
The buyer expects to reap 400 to 550 million euros of annual pre-tax cost synergies by the fourth year after the deal closes. It has budgeted 1 billion euros of “implementation costs”.
The deal will increase UPS’s non-U.S. sales by 10 percentage points to 36 percent of revenues. Morgan Stanley, UBS and Bank of America Merrill Lynch advised UPS, while Goldman Sachs advised TNT and Lazard advised TNT’s supervisory board.

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