TNT Digs Teeth in Over Price With UPS

It was revealed on Friday that Dutch delivery firm TNT Express is haggling hard with United Parcel Service UPS over its worth as UPS looks to buy the company. According to Reuters, UPS has confirmed that it still interested in acquiring TNT, and it would be seeking Dutch regulatory approval for an offer by May 11. UPS said that talks between the two companies have been constructive, and with no rival big popping up and TNT reporting weaker-than-expected results, the deal is expected to go through fairly seamlessly. Sources have said that the only stumbling block remains the value of TNT which, admittedly, is a big stumbling block. UPS proposed 9 euros per share in February, and that was rejected. Still, UPS hopes to reach an agreement by the end of next week. "If we don't find an agreement next week, then we'll be in trouble", said one of the sources, who is familiar with TNT, to Reuters. On February 24, Jefferies released a research report stating that it estimates that UPS's proposal of €9.00 would be 3.5% accretive in the near term, 5.9% accretive in the long term. Surprisingly, the transaction would be more accretive to FDX at this valuation. However, Jefferies estimates UPS can raise its bid to €12.75 without it turning dilutive, outbidding FDX's theoretical max by 13%. “At UPS's initial proposal to acquire TNT at €9.00, we estimate that the transaction would be $0.17 accretive to UPS (or 3.5% to our 2012e EPS) in the first full year (assuming for sake of analysis that all cost savings are recognized on Day 1). This accretion improves to $0.29 per share (or 5.9%) for UPS in the out years — particularly as the amortization of intangible assets roll off.”