United Parcel Service
The U.S. firm has little incentive to improve its offer of 9 euros per share given TNT's poor results and the absence of a counter bidder, the sources said.
TNT last month rejected the offer by the world's largest package delivery company, but any sweetener is likely to fall short of shareholder hopes for a 9.5 euro per share deal, the sources said.
If you look at TNT's fundamentals, you would wonder why anyone would be willing to pay more than 9 euros (for TNT), said one of the sources, who is close to TNT Express.
TNT declined to comment. TNT Express posted weaker-than-expected fourth quarter results and highlighted a bleak economic outlook, undermining its attempts to extract a higher price from UPS or attract others.
While a sweetener might facilitate board approval, the final price was likely to stay near 9 euros per share, the sources said. TNT is now desperate to get that deal done, the first source said. TNT's shares jumped to an all-time high of 10.24 euros following UPS's approach, driven by hedge funds' hopes for a bidding war with U.S. rival Fedex
Negotiations between the parties are now coming to an end and a deal is expected soon, the sources said.
Only a few social issues regarding employment and the location of the merged entity's headquarter are still being discussed, two of the sources said. The source close to TNT Express said he did not expect significant antitrust issues, and said UPS had not been required by the competition watchdogs to line up upfront buyers for any possible disposals.
The location of the merged entity's headquarters has always been a concern for the Dutch firm, said a sector banker closely following the situation.
While a merged company needed a European headquarters, there was no need for this to be very large, the banker said, noting that UPS tends to integrate companies it has acquired very closely into its main operations.
Job cuts are also among the sticking points, though the company at its fourth quarter results indicated that a restructuring was unavoidable in any case, the banker added.
Trade unions are concerned that a tie-up with UPS would lead to deeper job cuts, as employment contracts in Europe are costlier than in the United States, said Jaspers Jansen, an economist at the Dutch shareholder lobby VEB.
If they (TNT's management) deem job security and headquarters as the most important elements, then you would expect them to have less bargaining power on price, said Jansen, who still hopes UPS will increase its final bid.
(Additional reporting by Soyoung Kim in New York. Editing by Douwe Miedema and Will Waterman)