March 19, 2012- U.S. package deliverer UPS has announced it will purchase TNT Express its rival in Europe. The purchase is thought to be valued at over $6.8 billion dollars. The two companies reached the agreement on Sunday and were going to officially announce it on Monday. UPS will pay a per share price of $12.50 for the Dutch business.
UPS said the acquisition would not only help expand its reach in Europe but also in Latin America and Asia. UPS said currently just 26% of all its revenue is generated outside the United States. However, with this purchase, UPS said that figure would jump to 36%.
The annual worldwide revenue for UPS will now jump to over $60 billion. In premarket trading, the stock for UPS was slightly higher. This deal ends a number of years of speculation as to the two companies joining forces. Back in 2008, FedEx approached TNT.
One big reason UPS purchased the Dutch company was to have a delivery network in China. UPS has been very interested in expanding in the world’s second largest economy. UPS approached TNT in February about the purchase and the stock in the Dutch company soared to over $13 per share. However, it has retreated since then to be at just over $10.
When finalized, the takeover will be UPS’s largest in history. It has bought over 30 companies in the last 12 years but none has been valued at higher than $1.3 billion.