08/14/2008 (2:21 am)
TNT takeover talk: real deal or boy who cried wolf?
In the world of package companies, there is one story you can rely on to come up with mind-numbing regularity: speculation that either United Parcel Service Inc (UPS.N: Quote, Profile, Research, Stock Buzz) or FedEx Corp (FDX.N: Quote, Profile, Research, Stock Buzz) are in talks to buy TNT NV (TNT.AS: Quote, Profile, Research, Stock Buzz).
The latest speculation that UPS is in talks to buy TNT for 10 billion euros ($15.2 billion) sent the Dutch mail company’s stock up more than 5 percent. A mid-July rumor that FedEx was doing the same sent TNT stock up nearly 30 percent in a single day. Ten days later, TNT’s stock fell 18 percent on a report that talks had ended.
While this talk almost invariably comes to naught - and both companies have consistently refused to comment on the recurrent rumors - some day TNT would make a good fit for UPS and an even better one for FedEx. TNT’s stock rises on rumors of an imminent bid because a deal is seen as a good long-term strategy for either company.
“The rumors come up every couple of months, and every time nothing happens,” said Jason Seidl, an analyst at investment bank Dahlman Rose faxless payday loans. “The problem is that a deal makes sense, FedEx needs TNT, and UPS could use it, so that’s why TNT’s shares react.”
“Eventually, I am convinced there will be a deal, but in the meantime it’s like the little boy who cried wolf,” he said.
Most analysts greeted the latest episode in what Seidl termed the “TNT saga” with more than a dash of skepticism. They rolled out reasons why the Dutch company would be a good buy but also stressed that any announcement of a deal by UPS or FedEx would result in a bidding war.
“Recently, there has been increased press speculation about first FedEx and now UPS purchasing all of TNT or its Express division,” Edward Wolfe of Wolfe Research wrote in a note for clients. “We … believe at this point there remains little evidence of such a deal occurring.”
Even if a deal is not in the works, stock moves on the back of rumors are suspicious, some analysts said.
No Comments
No comments yet.
RSS feed for comments on this post.
Sorry, the comment form is closed at this time.