BERLIN -- Marie-Christine Lombard hasn't been in her job as CEO of TNT Express, the international express delivery company, for a year yet, but she may soon be looking for another job. If United Parcel Service (UPS) really does take over the Hoofdorp (Amsterdam)-based TNT, as the U.S. company plans to do, Lombard's days at the head of the company are numbered.

UPS is offering 5 billion euros for TNT, whose management has refused the offer. But it could just be a matter of time – and maybe a higher offer. Another possibility is that FedEx, UPS's arch-rival, engages the latter in a bidding war. Either way, TNT – as has been predicted for some time – is likely to lose its autonomy.

Last year's consistently dissapointing quarterly results are a big part of the reason why TNT is ripe for a take-over. Lombard presented the company's most recent earnings figures on Tuesday. She reported fourth quarter losses of 173 million euros, and admitted also that TNT is having a "difficult start" in the first quarter of 2012. DHL, a subsidiary of Deutsche Post, earned billions in profits from the express business in 2011. UPS announced an annual profit of $4 billion. TNT, in contrast, keeps having to postpone trying to meet its profit targets.

The company's problems appear to be self-inflicted. So far, acquisitions and expansion in India, China and Brazil have only cost TNT money. The structure and equipment needed to operate on a global scale require big investments and only bring profits if used to full capacity. Sector experts say that TNT is too small to be able to keep up with UPS, FedEx and DHL, and doesn't have enough financial means to build the company up.

Shareholders ready to sell

Another factor is that major TNT shareholders -- financial investors Jana Partners and Alberta Investment, both known for aggressiveness in realizing their goals -- are pressuring it to sell. Another big investor, New York-based investment fund White Eagle Partners, made it known over the weekend that they thought 15 euros per share was appropriate, which is miles away from the 9 euros that UPS is offering. Dutch Post NL owns 30% of TNT; the rest of the stocks belong to many smaller holders.

U.S. sector leader UPS has had its eye on TNT for a while, and the American company has admitted having made earlier bids to buy it. "Since there's no longer a lot of room for growth on the home market, the Americans are going into the European market in a big way," Horst Manner-Romberg, head of Hamburg-based MRU, a courier, express and parcel delivery logistics consultancy, told Welt Online.

UPS dominates the global express market, which is to say the business of rapid – and expensive – delivery of letters and parcels. Its interest in TNT would be the latter's extensive truck network throughout Europe, Australia and South America.

UPS could face integration problems

TNT was founded in Australia, and – as Thomas Nationwide Transport – was sold in 1996 to the Dutch postal service, which is where its strong market position comes from. Although UPS, with 10% market share, is also big in Europe, it's nowhere near as strong as either TNT, which has 18% market share, or the Deutsche Post subsidiary DHL.

But a TNT take-over by UPS does stir up some questions. What would UPS do with the TNT brand? How would the company mesh its products, prices and distribution networks with those of TNT? TNT works a lot with subcontractors, while UPS prefers to work with its own people. "The integration of a complete express company, like TNT, that is structured completely differently will definitely pose problems for UPS," says Manner-Romberg.

A different question entirely is whether UPS would get the go-ahead from E.U. antitrust authorities. Sector experts believe that Deutsche Post will step in and, citing restrictions in the U.S. market, demand fair competition conditions. Speculation about the future of TNT has impacted company share prices, which went soaring to just over 10 euros on Monday.

Read the original article in German

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