19 March Proposed Acquisition of TNT Express Delivering More Together Positioned for Growth

Transcription

1 19 March 2012 Proposed Acquisition of TNT Express Delivering More Together Positioned for Growth

2 Safe Harbor Statement Cautionary Statement About Forward-Looking Statements This presentation contains some forward-looking statements regarding our intent, belief and current expectations about our strategic direction, prospects and future results. Statements in the future tense, and all statements accompanied by terms such as believe, project, expect, estimate, assume, intend, anticipate, target, plan, and variations thereof and similar terms are intended to be forward-looking statements. Such statements give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to: general economic conditions, both in the U.S. and internationally; significant competition on a local, regional, national, and international basis; the existing complex and stringent regulation in the U.S. and internationally, changes to which can impact our business; increased security requirements that may increase our costs of operations and reduce operating efficiencies; legal, regulatory or market responses to global climate change; strikes, work stoppages and slowdowns by our employees; the effects of changing prices of energy, including gasoline, diesel and jet fuel, and interruptions in supplies of these commodities; changes in exchange rates or interest rates; our ability to maintain the image of our brand; breaches in data security; disruptions to the Internet or our technology infrastructure; our ability to accurately forecast our future capital investment needs; exposure to changing economic, political and social developments in international and emerging markets; changes in business strategy, government regulations, or economic or market conditions that may result in further substantial impairment write-downs of our assets; increases in our expenses relating to employee health and retiree health and our contributions to pension benefits; the potential for various claims and litigation related to labor and employment, personal injury, property damage, business practices, environmental liability and other matters; our ability to realize the anticipated benefits from acquisitions, joint ventures or strategic alliances; our ability to manage insurance and claims expenses; and other risks discussed in our filings with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K for the year ended December 31, Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements. 1

3 Transaction Highlights Cash consideration of 9.50 per TNT Express ( TNT ) share; 5.18bn ($6.79bn) enterprise value (1) Offer Price 53.7% premium over unaffected share price (2) 63.5% premium to 3 month unaffected VWAP (3) Estimated Financial Impact Approximately million of annual run rate cost synergies achieved by year 4 post close Immediately EPS accretive post close (4) Maintain targeted ROIC; Higher invested capital leads to greater economic profit No financing condition Financing Acquisition intended to be funded by $3bn existing cash on balance sheet and new debt arrangements UPS has a solid financial position and will remain committed to a strong balance sheet Launch date Q / Completion Q Other Terms Transaction subject to a number of conditions, including regulatory clearances and approvals (80% acceptance threshold) PostNL N.V. committed to tender its shares (approximately 29.8% subject to customary conditions) 2 Note: EUR converted into USD at FX rate of (source: ECB spot rate as of 16 th March 2012) (1) Equity value plus total debt, less cash and equivalents; equity value based on diluted share count of 543m (2) Share price of 6.18 as of 16 th February 2012 (day prior to confirmation of talks) (3) 3 month unaffected VWAP of 5.81 as of 16 th February 2012 (4) On an adjusted basis expected to be accretive inclusive of net synergies

4 Delivering More Together Complementary strengths of both organizations will create a unique global platform and enhance our respective capabilities Strong cultural fit: Strong management teams Customer service Operational excellence Promote from within Corporate citizenship Delivering More Together Positioned for Growth Market leading presence in the U.S. Global presence in express small package, forwarding, distribution and supply chain management Market leading technology and industrial process expertise Industry leading free cash flow generation and margins Solid coverage across Europe Extensive Intra-Europe road Express freight network Strong reputation for customer service Sizeable RoW platforms in Australia, Brazil, China, Middle East and other Emerging Markets Creates a combined entity with over $60bn ( 45bn) in annual revenues Solid domestic and trans-border European network Market leader in transportation technology Enriched service quality Enhanced global network built to perform Long term geographic and portfolio diversification of earnings and free cash flow growth 3 Note: TNT figures converted into USD at FX rate of (source: ECB spot rate as of 16 th March 2012)

5 Compelling Transaction for All Stakeholders Customers Enhanced global reach Deeper product offering Enhanced customer service Comprehensive solutions for complex and global supply chains Employees and Communities Employer of choice part of a global growth story Culture of continuous innovation Commitment to promotion from within Respected corporate citizenship worldwide Commitment to a sustainable environmental footprint Be part of an industry leader and drive the global growth story Shareowners Enhanced global leadership position and access to growth markets Compelling scale economies and potential synergies maintain returns on capital and drive improved free cash flow UPS spent considerable time evaluating potential integration opportunities Maintain dividend distributions and share buyback program Delivering More Together Positioned for Growth 4

6 Strategic Rationale Timing is right: De-merger of TNT Express created a pure-play express business Strategic infrastructure investments (Worldport/Shanghai/Shenzhen/Cologne) and delivery of aircraft in process or completed, positioning UPS for growth TNT complements UPS s long-term network plan UPS is emerging from the global recession with strong growth momentum Advantageous financing market Addition of TNT Express to UPS portfolio executes on our strategy: Invest to Grow Accelerates global growth for the enterprise Transform Broadens UPS s global footprint, further connecting the world Create Value Strengthens UPS s comprehensive service offering 5

7 UPS Committed to Europe Since UPS begins service in Germany UPS expands service between the United States and 6 European countries UPS expands service to 15 European countries UPS acquires 9 European package delivery companies UPS completes its European ground network by acquiring 5 delivery companies UPS launches new portfolio of pan- European services, rolls out Worldwide Express Plus service 2nd day delivery to 150 cities in 14 European countries UPS announces agreements to acquire Messenger Service Stolica S.A. and LYNX Express UPS Tradeability launched Service Expansion Coverage expands to 60 countries and territories across Europe UPS Paperless International Invoice and International UPS Returns launches Europe access points increase by approximately 7,000 as UPS acquires Kiala Facility Expansion UPS opens expanded hub in Cologne/Bonn airport UPS completes construction of a new hub in Tamworth, England, UPS s largest ground hub outside the U.S. UPS to complete expansion of hub in Cologne/Bonn airport Healthcare UPS acquires Italian pharma logistics company, Pieffe UPS opens a new dedicated global healthcare facility in Venlo, the Netherlands Eastern Europe and Middle East UPS acquires its authorized service contractor in Romania UPS expands its Middle Eastern presence with the acquisition of its authorized service contractor in Turkey Porto Lisbon Benavente Limerick Madrid Dublin Barcelona Nuneaton Barking Lille Amsterdam Brussels Chilly Lyon Luxembourg Basel UPS in Europe Today Kolding Herne Milan Frankfurt Stuttgart Gothenburg Hamburg Düsseldorf Nürnberg Munich Vienna Insbruck Bolzano Bologna Oslo 60 countries and territories served 9,000 access points 43,000 employees $6.1bn (1) of revenues Copenhagen Malmö Rostock Berlin Hannover Gorzow Krosniewice Prague Brno Ostrava Linz Ljubljana Bari Stockholm Poznan Katowice Bratislava Warsaw Budapest Helsinki Patras Tallinn Riga Kaunas Timisoara Sofia Thessalonika Athens Bucharest 6 (1) 2011A

8 TNT Express Key Highlights Leading European franchise 7.25bn ($9.51bn) of revenues and 228m ($299m) of underlying EBIT in 2011 (1) Presence in over 200 countries including high growth emerging markets Fleet of 46 aircraft and over 30,000 vehicles Network of 2,653 hubs/depots Over 1 million deliveries every day 77,478 employees worldwide Revenue by Geography Other Networks Americas 7% 6% Asia Pacific 24% 63% EMEA 7 Source: TNT Express 2011 Annual Report Note: TNT figures converted into USD at FX rate of (source: ECB spot rate as of 16 th March 2012) (1) Adjusted figures

9 TNT Express Service Offerings and Customer Focus Service Offerings Solid international small package portfolio Extensive European and Middle East Express Road Freight network Time definite Brazil and China Road Freight network Value Added Services including special handing services, proximity storage, technical support, clinical solutions and dangerous goods transport Strong Customer Focus 8 Entrepreneurial culture Employee reputation for providing leading customer service Top 500 European Customer Mix(1) Lifestyle / Other 10% Healthcare 20% Focus on connecting Europe with the rest of the world Sustainable solutions to reduce TNT Express s and its customers social and environmental impacts (1) 2011 TNT Express Capital Markets Day Presentation High-tech 25% Automotive & 45% Industrial

10 TNT Express A Natural Evolution of UPS s Strategy Connecting Global Supply Chains Proposed Acquisition of TNT Express Expand Portfolio Across Supply Chain Strategic Investments in Network UPS Airline UPS Goes Global U.S. Common Carrier Founded as Local Carrier Today

11 Europe: One of UPS s Growth Engines Land of Opportunity U.S. and Europe have comparable GDP, but Europe is condensed on a smaller land mass European Express market grows at a historical multiple of ~3x to European GDP(1) Developing small package market with strong intra-europe activity Cross-border trades create natural alignment with our distribution business Strong European exports create profitable revenue streams Complex supply chain solutions increasingly in demand TNT: A Unique Opportunity Entry into European Road Freight Network Enhanced domestic and international customer solutions for Small Package, Express Road Freight and Value Added Services Potential to enhance network density and improve operating efficiency 10 (1) Source: Datamonitor, Wall Street research UPS Hubs and Major Facilities TNT Hubs and Major Facilities Increased Presence after Transaction

12 Enhanced Global Footprint UPS Today(1) 14% Proforma UPS/TNT(1)(2) Europe, Middle East & Africa 12% Europe, Middle East & ~ 22% Africa Rest of World 74% 64% ~ U.S. ~14% Rest of World U.S. Total Revenue: $53bn ( 40bn) 11 Total Revenue(2): >$60bn (> 45bn) Proposed TNT Express acquisition significantly increases UPS s non-u.s. revenues Increased exposure to fast growing emerging markets Note: TNT figures converted into USD at FX rate of (source: ECB spot rate as of 16 th March 2012) (1) UPS 2011A; TNT Express 2011 Annual Report (2) Proforma estimates may change as accounting and reporting are made consistent

13 Enhanced Customer Access to the Global Marketplace Provides stronger global solutions for customers Increases U.S. and Europe connectivity with Asia Pacific, China and other Emerging Markets Enhanced network ` density and optimization, resulting in increased operational performance UPS Hubs and Major Facilities TNT Express Hubs and Major Facilities Increased Presence after Transaction 12

14 Solution Enhancement Geographic Enhancement Enhanced Service Offerings Market Leading U.S. Presence Europe Small Package Portfolio International Small Package Portfolio Emerging Markets Presence Current Combined Europe and Middle East Express Road Freight Network Supply Chain / Freight Forwarding Solutions Healthcare Solutions UPS TNT 13 Enhances customer services globally and provides leading presence across all segments Significantly increases UPS s product capabilities in Europe and Middle East Road Freight Extends connectivity of Europe and U.S. with the rest of the world

15 Compelling Synergy Potential Approximately million of annual run rate cost synergies achieved by the end of year 4 post close Potential Synergies Approximately 1 billion in total integration costs over 4 years post close TNT and UPS assets and infrastructure to be optimized, resulting in a more efficient network for both brands Leverage combined platform to enhance customer value and revenue opportunities Potential Integration Opportunities Identified 14 Company cultures of optimization and customer service dedicated and experienced UPS and TNT personnel to execute on integration Unique country-by-country approach Phased approach with customer alignment first, followed by operational integration Focus on retaining personnel Note: EUR converted into USD at FX rate of (source: ECB spot rate as of 16 th March 2012)

16 Potential Sources of Cost Synergies Cost Synergies Country Operations Air Network General and Administrative Sources Increased driver efficiency across network Increased efficiency in hub / feeder operations Optimization of combined air network (intra-europe and intercontinental) Increased efficiency in ground handling Procurement synergies Standardization of processes Support function efficiencies Annual Run Rate Cost Synergies following integration: Approximately million Total Integration Costs: Approximately 1 billion Majority of integration expected to be completed by year 4 post close 15 Note: EUR converted into USD at FX rate of (source: ECB spot rate as of 16 th March 2012)

17 Clear Integration Principles Our Guiding Principle: The Customer Comes First Product portfolio integration first Country-by-country operational integration Sales force integration across territories Technology integration One product portfolio based on the best of both companies One single operation, fully integrated One integrated sales force with single territory responsibilities One brand in all countries around the world Management Culture that Rewards Success and Focuses on Customer Service, Operational Excellence, Employee Engagement and Corporate Citizenship 16

18 Potential Integration Opportunities Identified Three Phased Integration Plan 1 Facility by facility planning period with TNT 2 Two networks 3 One network Draft Integration Plans Developed for Each Country 17 Customer centered rollout will be UPS s primary focus Product harmonization with customer demands Most efficient and value added operating facilities and practices (TNT or UPS) to be retained after planning period Phasing will differ by country TNT & UPS leadership will be part of an Integration Committee Disciplined and focused multi-year integration plan

19 UPS to Utilize a Measured Approach to Integration Timing Customer Communication One Brand One Operation Continued Focus on Current Global Business Service Initiatives Validate Integration Plans Detailed Planning with TNT Consultation with Employee Bodies Customer Communication Commence Ground Integration IT Integration Launch Acquisition Completed 18 Facility by Facility Optimization Execute Full Air and Ground Network Execute IT Consolidation Execute Shared Services Effective Employee Communication Execution Phase Year 4 Post Close

20 Anticipated Offer Timetable 17 Feb 2012: Initial announcement of potential transaction 19 Mar 2012: UPS and TNT announcement to have reached agreement on transaction 11 May 2012: Ultimate date for filing of draft offer memorandum with Dutch Authority for the Financial Markets (AFM) and statutory certain funds announcement Q2 2012: Start of offer period Q3 2012: Close of offer period(1) 19 (1) Assumes Phase 1 clearance in the normal timeframe

21 Financial Impact for Shareowners What Will Change What Won t Change Additional revenue and earnings diversification Enhancement of customer value proposition Enhanced global network UPS s commitment to maintain a strong balance sheet UPS s commitment to dividend distributions Flexible share buyback program to maintain attractive shareowner returns Increasing Revenue and EBITDA compared to UPS s 2011 standalone results What Will Be Delivered 20 Value creation through realization of annual run rate cost synergies of approximately million Target ROIC still achievable on a higher invested capital base, generating greater economic profit Note: EUR converted into USD at FX rate of (source: ECB spot rate as of 16 th March 2012)

22 Compelling Transaction for All Stakeholders 21 Customers Comprehensive solutions for complex and global supply chains Employees and Communities Be part of an industry leader and drive the global growth story Shareowners Delivering More Together Positioned for Growth

23 Delivering More Together Positioned for Growth