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Home » TNT to split mail, express businesses
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TNT to split mail, express businesses

August 3, 2010
Mark B. Solomon
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Dutch transport giant TNT announced today that it would separate its mail and express businesses effective Jan. 1, 2011. This move could trigger a possible bidding war among the three largest express companies for TNT's intra-European and inter-continental assets.

The announcement came in a statement disclosing TNT's second quarter results, which included a solid performance from its express division but weakness in its mail business. TNT's express business is focused on intra-European and international operations linked to Europe; it has almost no presence in the U.S. market, although it does operate a trans-Atlantic air-ground network with U.S. trucker Con-way Inc.

In April, TNT disclosed that it was evaluating the possibility of separating the mail and express businesses. In the company's Aug. 2 announcement, CEO Peter Bakker said the two units separately "will be able to operate best-in-class in their respective industries by building on strong management and a solid capital structure to successfully implement their strategies."

Bakker said he remains cautious on the outlook for the European economy, although he does expect to see a "modest improvement" as the year progresses. Mail volumes in TNT's home market of the Netherlands are expected to fall between 7 to 9 percent, due to the impact of postal deregulation, which took effect in 2010, and competitive pressures from alternative products, Bakker said.

In a research note, analysts at JP Morgan Chase said TNT management indicated that a sale of the Express unit to either UPS Inc. or FedEx Corp. would be one potential avenue towards achieving a full separation of the mail and express units. "We believe FedEx or UPS would end up paying a strong price and valuation for TNT Express in a takeout scenario," the analysts said in their note.

Of the world's four main express companies (the other being DHL Express), FedEx is considered to have the weakest competitive position in Europe but acquiring TNT could help to change that. UPS, which has a much larger presence on the continent, could also be interested in acquiring TNT as it would beef up its European exposure. The acquisition of TNT would allow UPS to pose a more powerful competitive threat to DHL, considered the market leader in Europe.

Transportation Air Parcel & Postal Carriers
KEYWORDS DHL FedEx TNT UPS
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Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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