* UPS says talks "constructive"
* Four week update deadline passes with no deal
* Price is still an issue - sources
* Pension, other social issues solved - sources
* No rival bid from FedEx expected
By Anthony Deutsch and Sophie Sassard
AMSTERDAM/LONDON, March 16 United Parcel
Service's plan to buy Dutch delivery firm TNT Express
moved into a new phase on Friday that looked set to
deliver the U.S. firm its prize even though price is still an
issue between the pair
The world's largest package delivery company confirmed it
was still interested, and said it would seek Dutch regulatory
approval for a firm offer by May 11. It made the statement in an
update bidders in the Netherlands are obliged to give four weeks
after an initial approach.
UPS said talks were "constructive". No rival bid has
emerged, and in the meantime TNT has reported weaker than
expected results and offered a bleak outlook.
Two sources familiar with the situation said the two parties
were trying to reach final agreement on price on the roughly 4.9
billion euros ($6.4 billion) deal.
UPS last month proposed 9 euros per share, an offer that the
Dutch company rejected. The parties are now hoping to reach a
deal by the end of next week, the two sources said.
"If we don't find an agreement next week, then we'll be in
trouble", said one of the sources, who is familiar with TNT. Any
longer wait could cause UPS to lose patience, he said.
The talks are also focused on social issues including the
location of TNT's headquarters, employment and the pension fund
after TNT rejected UPS's latest bid in February. But these
issues had now succesfully been resolved, the sources said.
"All is now good on social issues", the first source said.
"Price is the issue".
TNT Express is not expected to extract a price much higher
than 9 euro a share after the company reported weaker than
expected results amid a bleak economic outlook.
"TNT performance is a big issue", a source close to UPS told
Reuters on Thursday.
In the absence of a new suitor or glaring regulatory issues,
United Parcel Service has little incentive to improve
its last offer, the sources said.
The U.S. suitor could however offer a symbolic sweetener to
win board recommendation, a common practice in such
transactions, the first source said.
Some TNT shareholders still held out hope of a counter bid
from FedEX Corp, but sources familiar with the
discussions said there had been no advances.
TNT Express, which employs people 83,000 worldwide and 3,000
in the Netherlands, has unspecified pension liabilities and is
the middle of a costly restructuring plan to counter declining
delivery volumes and reduce costs.
PostNL, TNT Express's largest shareholder which shares a
pension fund with TNT because the companies were once both part
of the Dutch state mail company, relies on the proceeds of a
deal to pay a pension deficit, the first source said.
Trade union spokesman Reinier Stroo said on Friday the Dutch
employees are most concerned about keeping full pensions and
"social character" of the company.
"It would be a waste for UPS to replace the well-known TNT
brand in Europe with its own brown stickers," he said. "We are
pushing for them to guarantee jobs, pensions and favourable
terms of employment TNT is known for."
The companies have some overlap in Europe, such as in the
freight business, and UPS has a regional headquarters in
Germany, but Stroo said he doesn't expect redundancies.