LONDON/NEW YORK (Reuters) - United Parcel Service (UPS.N) and TNT Express TNTE.AS are unlikely to announce a deal on Friday when they need to update the market about the status of their merger talks, but a deal could come soon after that, sources close to the talks said.
The companies need more time to hammer out final details, but they are getting closer to an agreement and will say on Friday that they remain in discussions, the sources said.
“I don’t think it will take several more weeks”, one of the sources said.
UPS had four weeks after it approached Dutch-based TNT Express to clarify its intentions under Dutch takeover law.
“Lots of concessions were made on the social front”, said a second source, who is close to UPS.
“TNT performance is a big issue”, the same source added.
Dutch unions sent a letter to TNT Express’s board after consulting employees on their concerns regarding an acquisition by UPS. Job protection, employment contracts and the location of the future company were among the main concerns, said Marc van Kerkhoff, who represents TNT Express employees.
Price discussions were put on hold after the Dutch parcel-delivery firm rejected a 4.9 billion-euro ($6.38 billion) proposal from UPS last month, and have yet to resume, the first and the second source said.
UPS is confident that its bid for TNT Express will not meet significant anti-trust hurdles and would be approved by the European watchdog in phase 1, the second source said.
Some shareholders are still hoping for an improved offer, but UPS is seen as unlikely to improve by much its last offer of 9 euros a share, given TNT’s poor results and the absence of a counter bidder.
Both parties have ruled out a potential counter bid from FedEx Corp (FDX.N) at this point, the sources said.
TNT Express has since reported weaker than expected fourth-quarter results and given a bleak economic outlook.
TNT Express declined to comment. UPS representatives could not be reached for comment.
Editing by Douwe Miedema, Greg Mahlich and Bob Burgdorfer