UPS has got its target – and it’s not entirely surprising under the circumstances. TNT has struggled outside Europe since being cut free of the Dutch Post Office – notably in Brazil.
Last year the Americas region produced an operating loss of 360m euros compared to a 67m euro loss in 2010. The Asia Pacific region produced a loss of 76m euros compared with an operating profit of 14m euros last year.
And tough conditions in Europe, TNT’s strongest market, meant that profits were depressed – down four per cent to 356m euros.
It’s hardly been a secret that activist shareholders have been looking for changes in senior management to drive change in the business. There was even talk of Alan Jones rejoining the TNT board – Jones was responsible for the dramatic growth of the business back in the 1980s.
Of course, there is still room for someone else to come in with a higher offer – but it is hard to see who it might be.
UPS is paying a hefty premium – some 53 per cent over the TNT share price before the bid was revealed – it seems unlikely that FedEx would be prepared to pay more.
What will this mean for competition in the global express market? On the face of it, a reduction might be expected.
But rivals will be looking at the impact on their business and there may well be some that decide the most appropriate response is to increase the scale of their operations to maintain competitiveness. So we could easily see further takeovers and mergers.
But there is another intriguing possibility, suggested to me by a senior executive at another express carrier.
Increasingly, the customer base for parcel services is the online retail market. And some of those retailers are now so big that owning their own delivery services might actually make sense.
The idea that a company like Amazon would want to buy a parcel carrier might sound fanciful.
But mail order retailers have often owned delivery companies. German group Otto owns the Hermes delivery network, while Yodel is part of the same group as Littlewoods.
And even Amazon has adapted its business model over the years – from an assetless model to one in which it operates one of the largest networks of distribution centres in the world.
Whichever way it happens, it is likely that there will be more structural change to come in the express market.
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