TNT has accepted a sweetened offer by United Parcel Service (UPS) for TNT’s Express unit, making the US-based express delivery company the largest express package-shipper in Europe with €45 billion in global sales.

UPS upped its offer by 5.6 per cent to €5.16 billion in a deal that both companies said is a 53.7 per cent premium over TNT’s closing price the day before the companies announced they were in talks. If a third party makes a binding counter offer exceeding the UPS bid by eight per cent, TNT or UPS can terminate the
transaction, the companies said. That leaves the door open for another rival, such as FedEX, to bid but analysts have said that is unlikely.

UPS has long looked at TNT as a way to help it expand in Europe and the acquisition will be its largest purchase since the company was founded in 1907 as a bicycle-messenger service.

UPS controlled 7.7 per cent of the European express-parcels market in 2010 compared with TNT’s 9.6 per cent. Combined, they would be about as large as DHL, which had a 17.6 per cent share.
The offer also ends years of speculation about the future of TNT, which had split from Dutch mail company PostNL and was listed last year.

With falling profit and a poor outlook for 2012, TNT’s management had come under intense pressure from activist shareholders to seek a buyer. UPS said the acquisition will accelerate its global
growth strategy by increasing foreign revenue from 26 to 36 per cent of the group total. The deal will bring annual cost synergies of about €400 million to €550 million by the end of 2012 when it is due to close, UPS said.