UPS to access bank debt, $3 billion cash on hand to fund $6.77 billion purchase of TNT Express

By Lisa Kerner

Charlotte, N.C., March 19 - United Parcel Service, Inc. will use $3 billion of existing cash and bank loans to finance its purchase of TNT Express NV in a deal that values TNT Express at about €5.16 billion ($6.77 billion), UPS chairman and chief executive officer Scott Davis said during a conference call on Monday.

UPS and TNT reached an agreement on a recommended all-cash offer of €9.50 per ordinary share for TNT Express, a premium of 53.7% to the unaffected share price of TNT Express of €6.18 on Feb. 16, the day before the company's announced ongoing discussions, according to a joint news release.

Davis believes the merger will be accretive as of year one, with the closing expected to occur in the third quarter of 2012, if all conditions are met.

The business combination deepens UPS's existing position in fast-growing regions including Asia-Pacific and Latin America as well as expands the Atlanta-based package delivery company's express capabilities in Europe.

In addition, the transaction will create a global leader in the logistics industry with more than €45 billion ($60 billion) in annual revenues, the companies said.

Morgan Stanley, UBS and Bank of America Merrill Lynch are financial advisors to UPS. Goldman Sachs is financial advisor to TNT Express.

TNT Express is an express delivery company based in Hoofddorp, the Netherlands.

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