UPDATE 3-TNT to split, puts Express in shop window

* To demerge its Express activities

* To keep 29.9 pct stake in Express

* Chief executive Bakker to stay until demerger
* Shares up 5 percent on relief no capital hike

(Adds analyst, Bakker comments)

By Marcel Michelson

AMSTERDAM, Dec 2 (BestGrowthStock) – Dutch mail and logistics
company TNT (TNT.AS: ) is to separate its Express activities from
its mail business and keep a 29.9 percent stake in the demerged
unit.

Thursday’s move cut TNT down to its old postal activities
and could make Express a takeover target in a new consolidation
wave in the global sector in which Fedex (FDX.N: ) and United
Parcel Service Inc (UPS.N: ) are big rivals.

TNT shares were up 7 percent at 20.17 euros at 0927 GMT
after the demerger details and on relief it had not sought fresh
funds from shareholders.

The split into two listed companies was decided due to
limited synergies between the two units and divergent strategic
profiles and marks another major milestone in the checkered
history of what were the Dutch state postal services that
expanded into express and bought then Australian express firm
TNT in 1996.

Mail will include postal operations in the Netherlands,
Germany, Italy and the UK and will grow with its parcels
business and international activities.

Express will focus on fast high-end standard parcels and
freight and value-added services. Express will get a new listing
and the old TNT NV will keep Mail and a stake in Express.

TNT said it would tender its remaining stake in Express in
the case of a recommended bid for the activities and would only
tender its stake in the case of an unsolicited offer if a
majority of shareholders accept it.

GROWTH EXPRESS AND VALUE MAIL

Express, headed by chief executive Marie-Christine Lombard,
has a target to generate and earning before tax and interest
(EBIT) of 900 million euros ($1.2 billion) to 1.0 billion euros
by 2015.

Lombard is now managing director of the Express activities.
Group finance director Bernard Bot will go to Express

Mail targets stable cash EBIT of 300 million to 370 million.

Mail will be headed by chief executive Harry Koorstra,
already managing director at the postal activities and in charge
of the restructuring of these activities where TNT is seeking
4,500 job cuts.

The internal separation will be completed on January, 1,
2011 and the transaction will be proposed to the shareholders
meeting of May. There will be an interim dividend in March.

Peter Bakker will remain TNT CEO until the demerger.

“There are only two possible buyers for express: Fedex and
UPS. For mail it would be private equity,” said ING analyst Axel
Funhoff.

TNT Express could be worth a little less than 10 billion
euros for a rival, while TNT mail was worth between 3 billion
and 4 billion euros, depending whether it remained public or was
bought by a private equity firm, Funhoff said.

Bakker told Reuters the Express stake could be sold by 2015.

TNT currently has a market capitalisation of 7 billion
euros, or $9 billion compared to $70 billion for UPS and $28
billion for Fedex.

MIND THE GAP

Analysts had feared TNT could make a cash call before the
demerger to boost its equity base, but the company said the
transaction proposed on Tursday avoids the need for a hike or
other capital markets transaction prior to the demerger.

TNT is hosting an analysts day in London to detail the
separation. It said there would have been an equity shortfall of
900 million euros if Express was demerged for 100 percent while
there could be another 900-million-euro writedown against equity
in 2012 or 2013 due to accounting standards.

By keeping a 29.9 percent stake in Express at Mail, these
issues are avoided. The sell-down of the minority shareholding
is anticipated over time, after a lock-up of six months.

The proceeds will be used to reduce the debt in TNT NV, seen
at some 1.2 billion euros, by 700-900 million euros.

Any excess capital will be returned to shareholders.

The history of the group goes back to the Dutch state-owned
post and telecommunications services which were privatised under
the name KPN in 1994. In 1998 the TPG postal activities were
separated from the KPN (KPN.AS: ) telecommunications company and
renamed into TNT in 2005.
(Additional reporting by Gilbert Kreijger and Greg Roumeliotis;
Editing by Hans Peters)
($1 = 0.7639 euro)

UPDATE 3-TNT to split, puts Express in shop window