TNT to keep 29.9pc stake in unit
Amsterdam, December 5, 2010
TNT, a leader in express and mail delivery services, said it will keep a 29.9 per cent stake in its Express unit once it is spun off from its Mail division in a bid to avoid raising funds.
The move, details of which were announced in a capital markets day presentation in London, cheered investors who had feared a cash call.
This means the firm is reduced to its former incarnation as a postal business. It also makes the Express operations a more attractive takeover target for the likes of FedEx and UPS.
TNT shares rose on Thursday after the demerger details and on relief it had not sought fresh funds from shareholders.
A full split of operations would have resulted in an equity shortfall of around 900 million euros ($1.19 billion) while TNT could face an additional shortfall of around 900 million euros against equity in 2012 or 2013 due to accounting changes, TNT said.
'We have an equity gap because Express is being separated and we could not list Mail with negative equity. One way to solve this would have been to raise capital but we think we have found a better route,' TNT chief executive Peter Bakker said in an interview.
TNT has a market capitalisation of $9 billion against $70 billion for UPS and FedEx's $28 billion.
TNT Express could be worth a little less than 10 billion euros to a rival, while mail was worth between 3 billion and 4 billion euros, depending whether it remained public or was bought by a private equity firm, ING analyst Axel Funhoff said.
'There are only two possible buyers for Express: FedEx and UPS. For Mail it would be private equity,' Funhoff said.
TNT NV said it will own the Mail operations and a 29.9 per cent stake in Express.
It will tender its remaining stake in Express in the case of a recommended bid and will only tender its stake in an unsolicited offer if a majority of shareholders accept it.
'The intent is to return the stake in Express to the market by 2015, it will be in steps. The better we perform, the sooner it will be,' Bakker said.
The TNT brand will go to Express and Mail will get a new name, he added.-Reuters