According to the Dutch bank SNS Securities an acquisition of TNT by UPS could not result in major regulatory issues. UPS has no mail activities in Europe yet.. With respect to Express, UPS is strong in the US and TNT in Europe. A combination would have a market share of less than 35% vs. 25% for the number two (DHL). With respect to Logistics and Freight Management, SNS sees no large problems either. The only issue could be the Dutch government. They require a good postal network in the Netherlands from TNT or its acquirer.

TNT booked an annual turnover of 12.6 billion euro over 2004. The turnover of UPS lies with 36.5 billion dollar (31.2 billion euro) 2.5 time higher. SNS predicts that UPS is willing to pay 25,50 Euro per share TNT.

Because of their ?golden share? the Dutch government can be an issue. This because of they require a good postal network in the Netherlands from TNT or its acquirer. The state will impose the buyer of TNT to strict requirements, to guarantee the operation of the Dutch mail network. The postal division of TNT, TPG post, is according to the Dutch Mail Law obliged to operate an uniform service. The company must provide postal services - for letters up to 100 grams- throughout the whole country for an equal tariff and under the equal conditions.

Besides of the ?Golden Share?, the Dutch state still owns 10 per cent of the shares. However it is their intention to gradually sell the shares and withdraw themselves and liberalise the mail market. The planning for the liberalisation is now set to mid of April 2007. The final liberalisation is subject of approval of the Dutch parliament and depending of the progress of the liberalisation in surrounding countries such as Germany and Great Britain.

Prior to the liberalisation of the European postal market, the whole sector is in a battle of consolidation. Early this year TPG was bidding for a 25-percent stake in the Danish postal service, and has also indicated an interest in taking a stake in Belgium’s De Post/La Poste. The CVC Capital Partners acquired this 25% share interest in the Danish Postal Company in June 2005. The Belgian State has decided to enter into an intensive discussion phase with Post Denmark and CVC Capital Partners Limited, with a view of establishing a strategic partnership process for Belgium?s De Post/La Poste. This news was followed up by Deutsche Post which communicated that they will acquire Exel Logistics for 5.5 billion Euros. The interest op UPS in TNT is not a surprise, especially because the TNT share is currently relatively weak.

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