TNT Express (NL0009739424) – “post mortem”

As it is commonly known, free lunches are few and rare in the stock market.

Another proof for this was last week’s termination of the TNT Express takeover by UPS.

I was quite lucky that I didn’t join in the “trade“, despite considering it quite seriously. My final decision was based on the believe that in such a “crowded” market like merger arbitrage, if a situation looks too good to be true, most likely it isn’t true.

Interestingly enough, a lot of “players” must still have believed in the deal. Looking at the chart, we can see that TNT is now trading relatively close to the lower bound of the “undisturbed” price before UPS came up with the bid:

As discussed in the previous post, at the current level, TNT Express is still not cheap, for instance compared to FedEx.

On the other hand, UPS seems to have been better off without TNT Express if we believe in “Mr. Market” as they have outperfomed the Dow Jones by almost 10%:

To me, this looks like that the offered price of 9,50 EUR was way too high and UPS realized this at some point in time and did not really try hard to get the deal through. For a company like UPS, blaming it to the EC is always a “face-saving” possibility.

However that also means that the price tag of UPS might never be reached again, even if FedEx would show up as potential buyer. On the other hand, TNT Express might still benefit by being spun off from POstNL which is crippled by pension liabilities and the terminally declining mail business.

PostNL Was even hit harder, dropping to a new all time low:

This might have to do also with Moody’s recent downgrade.

At the moment, both, PostNl and TNT Express are too much “hot potato” type investments, but it is definitely something for my “special situation” watch list. I think it will be especially interesting to see if TNT Express is able to turn around the business on a standalone basis.

Alsi for the future, I think it is the safest to keep away from Merger Arbitrage situations for my special situation “bucket”, as this requires very special skills which I do not have.

Edit:
It seems that French activist investor Lutetia is trying to start a campaign for PostNL. This could bcaome interesting at some point. Lutetia also showed up (quite succesful so far) in the SIAS Spa case.

13 comments

  • Zu den Anleihen:

    Ich denke, dass diskontieren wenig bringt.

    Eher dir Frage, was ist für die Coba ein gute Geschäft? Und 5% Zinsen im aktuellen Umfeld zu zahlen ist sehr viel. Während die 1,5% denen eher egal sein dürften.

    • ganz so einfach ist die Rechnung nicht. Ein “tier 1” der noch vord em Call Datum steht hat eine deutlich höhere Eigenkapitalanrechnung als ein Tier 1 der schon gecalled werden kann.

      Die 5% für einen noch voll anrechenbaren Tier 1 kann man nicht vergleichen mit den 1,6% für den “callbaren”.

  • Seems the conversation has drifted from TNT, at least as far as I can tell.

    I owned TNT Express after the spinoff, it appeared somewhat cheap compared to competitors and I thought management would shape things up. I also believed there’d be a sale because PostNL and large holders were agitating for one. There was the UPS offer and I sold at ~€9 as quick as I could.

    I’ve looked at the stock again briefly and I think the company is in worse shape now. Now there is no suitor, and operations have taken a turn for the worst. The company is selling at book value, but there’s a lot of goodwill on the books.

    The continued losses in Brazil are concerning, as well as the eroding market in Europe. I don’t have any personal experience with the company (they don’t serve North America) so I don’t really know what their brand awareness is like. It seems like they’re a smaller player in the express market in Europe.

    This stock will get really interesting if there is a management and Board shakeup, without that I’m not sure they’ll ever turn around, they might shrink until Europe finally turns around.

  • Sie werden mir 490 Euro abrechnen, da es eine EURO-Anleihe ist. Nur die Firma sitzt in den USA. Auch der Mindesteinsatz liegt bei 1000 Euro.

    • korrekt, habe es gerade gesehen, dass es eine in USA emittierte EURO Anleihe ist.

      Von daher dürfte die Anleihe etwas unterbewertet sein.

      Zinsnachteil aktuell ca. 4×3.3%= 13,2% undsikontiert bis 2016, danach -0,65% p.a.

      In der Tat sind die beiden Bonds pari passu. Mehr als 15% Differenz sollte es hier m.E. nicht geben.

  • 1. Ist die USD-Anleihe eine Euro-Anleihe…

    2. Ist immernoch %=% … M.W: betreibt keine Börse eine Währungsumrechnung. Won stünde denn die Anleihe wenn der Euro wertlos ist?. Dann bekomme ich sie umsonst, obwohl ich am Schluss in USD ausbezahlt werde?

  • Da liegst du aber falsch…

    % ist %…

    Der kleine aber fein Unterschied zwischen den Bonds dürfte der Koupon sein. 5% gegenüber 1,6 % …

    • Der DE000A0GPYR7 switched 2016, auf vairable, d.h. die 5% gibt es maximal 4 mal. Deshalb auch implizit ein zinsvorteil von knapp 15% undiksontiert gegenüber dem variablen US Bond.

      Zur Währung:

      Bei der Börse Stutgart sind das zumindest gemäss den Angaben hier EUR Kurse:

      https://www.boerse-stuttgart.de/rd/de/anleihen/factsheet?ID_NOTATION=16849201

      Währung / Notiz Euro / Prozent

      Also erstmal recherchieren bevor man Behauptungen in die Welt setzt. Free Lunches gibt es im Nachrangbereich kaum noch.

      Edit: Auf die Euro Notiz bei USD Bonds bin ich auch schonmal reingefallen…..

  • Krafft, Torsten

    Hello,

    I see that BNP is 76 Bid fort he DE000A0GPYR7 while nobody seems to care about the DE000CK45783 that trades around 47 at the Stuttgart Bond exchange. Even if the judges decide that CMZB has to pay all outstanding coupons for all T1 bonds the spread between the two bonds shouldn‘t exceed 20 points. The DE000CK45783 has less downside risk, has the largest outstanding volume of all CMZB T1 bonds and has a minimum size of 1k, what makes it more appropriate for retail clients. To me it looks like the DE000CK45783 is the „forgotten“ T1. Any comments from you?

    Kind Regards
    Torsten Krafft

    Mit freundlichen Grüßen

    V O L K S W O H L B U N D
    Lebensversicherung a. G.

    Torsten Krafft
    Wertpapiere Handel/Strategie

    Telefon: 0231/5433-255
    Fax: 0231/5433-665
    torsten.krafft@volkswohl-bund.de

    VOLKSWOHL BUND LEBENSVERSICHERUNG a.G., Südwall 37 – 41, 44137 Dortmund
    Vorstand: Dr. Joachim Maas (Vors.), Dietmar Bläsing, Dr. Ulf-Gerhard Gude, Martin Rohm
    Vorsitzender des Aufsichtsrats: Werner Ackermann
    Sitz des Unternehmens: Berlin, Registergericht: Amtsgericht Charlottenburg, HRB 450

    Telefon: 0231/5433-0, Telefax: 0231/5433-400, info@volkswohl-bund.de, info@volkswohl-bund.epost.de, http://www.volkswohl-bund.de

    • Doesn’t belong to TNT but interesting find.

      Howver you should check, if the quote in Stuttgart is really in USD (as the denomination) or EUR. If you pay for instance 470 EUR per 1000 USD bond, then the “true price” would be ~64% (47*1.33). At least in Frankfurt, the USD bonds which I looked at were quoted in EUR prices.

      If you then add the coupon disadvantage for the next 4 years (10-15% in total), the price looks relatively “efficient”.

      mmi

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