UPS’s withdrawal of its $6.9 billion offer to buy TNT Express likely will lead to a “fire sale” of the Dutch shipping company’s Asian and Latin American ground networks, health care supply-chain operations, and European road and parcel assets, a senior analyst for research firm Transport Intelligence said on Monday.
“TNT is more valuable in parts than as a whole,” Cathy Roberson said.
UPS on Monday pulled back on plans to buy TNT after the European Commission, hinting the acquisition would reduce competition in the European parcel market, said it would block the deal. UPS archrival FedEx isn’t expected to try to buy TNT in the short term, largely because it’s not clear the acquisition would fit into the carrier’s network, Jefferies & Co. wrote in a research note. The Memphis, Tenn.-based company also is focusing on improving its U.S. express network, Jefferies noted.
TNT’s road network in Latin America links Brazil, Argentina and Chile, and the company’s Asian network connects China with Vietnam, Cambodia, Laos, Thailand, Malaysia and Singapore. Both networks would be attractive to other shipping companies because are door-to-door, day-definite networks are in regions not known for such services.
Despite the attractiveness of the Latin American network to multinational shippers, the operations have consistently lost money for TNT. FedEx and UPS could use the Asian road network to leverage their newfound ability to provide domestic parcel services to a total of eight Chinese cities, Roberson said.
Clinical Express, TNT’s pharmaceutical transportation division, is also an attractive potential acquisition because of the burgeoning health care industry. FedEx and UPS could be attractive in the pharmaceutical-focused division because it would help them fill cargo planes, Roberson said.
TNT’s European assets could be sold whole or piecemeal, and global firms, excluding UPS, could bid on the cross-border road network and parcel delivery assets.
Roberson sees Dynamic Parcel Distribution, a parcel shipper, as a likely bidder, considering it’s an EU “darling” and was going to buy some TNT assets, as part of UPS’s aim to satisfy European regulators’ worries over the now-dead acquisition. But DPD’s parent company is GeoPost, a subsidiary of French postal company LaPoste, and that also could raise EU regulators’ eyebrows, Roberson said.
How TNT sold its Indian domestic road operations in 2011 could provide its shippers with a clue on the route ahead. TNT sold the operations to a logistics subsidiary of India Equity Partners and then made the company its preferred partner for domestic road delivery in India.
Contact Mark Szakonyi at email@example.com and follow him on Twitter at twitter.com/szakonyi_joc.