I was sort of wondering all along whether the "all in', very expensive acquisition of TNT made sense in the first place. We certainly were getting nothing close to a price break on the cost even though the company was struggling. We already have a strong presence in Europe so the main appeal would be the greater exposure to Latin America and other regions of the world. It seems to me to be more logical to utilize the FDX mode (and our historical approach) of acquiring smaller, strategically aligned companies that are more easily assimilated. With the muted global growth outside of China for an indefinite period of time, I'm happy this deal has imploded. Perhaps we have some type of insurance to cover the $280M or so break-up fee. Undoubtedly, this move will change the tenor of the Teamsters negotiations as more free cash is available as noted. All in all, I think today's price action indicates the market's approval of ending this one-sided affair.
UPS should buy a little company called Paid Inc. which owns a process patent that thousands of companies are infringing on which uses a zip code as the shipping cost point. They could charge all shippers .05 per transaction to use this shipping calulator method. Imagine getting a nickle per box extra from all companies who ship not only with them but FED EX as well.I hope this happens and I'm sure UPS knows about this company
UPS was never good at cost effective (key word) intergration or risk taking. That's not and never will be the mindset in the near term. TNT would have been a nightmare for shareholders. That being said, as TNT continues to go downhill, so will its services.Suppliers will turn to Fedex & UPS for their transport needs. On the back end, UPS will gain business without writing expensive checks. Anyone remember DHL's attempted integration into the U.S. and how they were going to take all customers from Fedx & UPS? How'd that work out?
Is it really 7 billion of free cash?? I thought it was about 3 billion cash and the rest borrowed--plus it was going to take a 1 billion over four years to integrate the two companies--
Short term, I don't think this hurts Brown too bad--but long term, this was going to be a good deal for the future of the company. And who really knows--- this thing could still go --maybe the EU got their bluff called and there will be tremendous pressure on them to approve the deal over the next year. Lots of money involved, so, as usual, follow the money.