TNT Again Target of Rumors

Aug. 12, 2008
The rumor mill has continued to churn regarding the potential acquisition of Dutch postal and express firm TNT while its principal rival, DHL, could face political pressure in the US

The rumor mill has continued to churn regarding the potential acquisition of Dutch postal and express firm TNT while its principal rival, DHL, could face political pressure in the US. Once again, TNT and a prospective suitor, UPS, are vowing not to comment on rumors that surfaced from unnamed sources indicating UPS could be in the market to acquire the Amsterdam-based global postal and express operator. Just weeks before, the Financial Times reported a rumor that FedEx was in talks with TNT.

Citing corporate policy not to comment on rumors and market speculation, both companies have remained silent.

Predicting an outcome on comments by even credible sources is, at best, an inexact science. Similar rumors had circulated in 2005 that UK-based logistics company Exel was on the UPS shopping list. That was countered with speculation that FedEx would mount a bid. In the end, Exel was acquired by Deutsche Post World Net (DPWN) and became DHL Exel Supply Chain.

The FedEx rumor has been widely discussed (FedEx Rumored in TNT Buy). Some industry sources expected UPS to make some noise, possibly to drive up the price FedEx would eventually pay for the acquisition.

UPS entered negotiations with TNT rival DHL for a $1 billion-per-year contract to handle US air lift just before the rumors about FedEx surfaced. TNT competes directly with DHL in many global express markets and on postal contracts in Europe. This raises a question whether DHL's parent DPWN would, in effect, agree to subsidize the US parcel giant expanding its competitive stature in Europe and other global markets.

Meanwhile, DHL faces other pressures as US presidential candidates scrutinize its deal to outsource air lift to UPS. The agreement would shift air operations from DHL's hub in Wilmington, OH to the UPS WorldPort air hub in Lexington, KY, roughly two hours south of Wilmington by road. The political cauldron has been stoked by an estimated 10,000 jobs at stake in Wilmington. Both John McCain and Barack Obama were pressed by Wilmington's mayor to promise congressional hearings on the matter.

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