>> However, I think for someone to really take advantage of the all work that you've done on postNL,they would really need to do their homework on TNTE.

I have looked a bit more at TNT. The business doesn't inspire me enough to dedicate an article to that one. Nevertheless, here are some thoughts:

1) I believe the company doesn't have a long-term strategy. They're just setting themselves up for a sale and subsequent break-up. You can see it by their actions and also the prior jobs of the current CEO.

2) Like DHL and UPS, they have big international market share in EU. This basically rules out DHL and UPS as buyers for anti-trust reasons. It leaves Fedex, Kuhne & Nagel, DPD (French post) and Royal mail as potential buyers.

In fact, Fedex drove the last nail into the coffin of the UPS deal by refusing to buy some of the assets from UPS after the deal. That would have given Fedex enough market share to leave 3 major players in EU. That would have appeased the regulators. Fedex pulled the plug on that deal.

3) Like Fedex, TNT has (had) significant market share in Brazil. TNT is leaving Brazil.... this makes them an easier target for Fedex.

4) They are leaving China.... where both Fedex and UPS have big share of market already. Now, an acquirer doesn't have to deal with regulatory issues in China or Brazil.

Given all this, I think of TNT as a speculative acquisition play. That's not my cup of tea.

My guess is a bid will come within 2 years. If it does, it will have been well-prepared and will be very likely to close. It will also probably be a bit lower than the UPS bid and a bit higher than current prices. Interestingly, Mason Hawkins owns both Fedex and TNT.

- Belgium has IPOed its postal service (market cap = $4B) and
- the UK is planning to IPO Royal mail in a few weeks (expected market cap of $4B)
- The pension fund of PostNL has performed reasonably well.
- The parcels division and international division have performed very well.

BPOST is interesting. It has a better balance sheet than PostNL but is still controlled (51%) by government. Also, parcels are a much smaller part of revenue than at PostNL. On the other hand, postal volumes in Belgium have declined at a lower rate in recent years.

I expect the decline of postal volumes in Belgium to accelerate in coming years. I believe Dutch banks and (local) governments are leaders in the digitalization of their communication with customers/residents. Other countries in the region will follow that path.

As for Royal mail..... it's a mess. The company doesn't own its post offices. This of course is a major competitive (dis)advantage. Then there's Scotland. They seem to have their own ideas about a universal postal service and are not amused by government in London deciding what's going to happen. In Scotland, they like to think they're independent.

IMHO Royal mail is going to face some major problems in coming years. PostNL, DPD and/or DHL may be able to take advantage. PostNL has been growing in the southeast of the UK.

Oh yes.... and the stock has come up a bit. It's now at roughly 5x my estimate of current owner earnings. Less if you back-out the market value of the TNT shares. At $4, this is still cheap.

Thanks for the update.You have a gift for understatement ("come up a bit"). It's up more than 70% from where I got in.Thank you for drawing my attention to the company.I was wondering if you had any thoughts as to why the stock has appreciated so much so quickly?

>> I was wondering if you had any thoughts as to why the stock has appreciated so much so quickly?

I don't know.

1) My best guess is that the investment community is now willing to believe the pension liabilities are not going to bankrupt the company. At the time of writing, that was seen as a near-term risk.

The pension fund has subsequently made some positive noises about coverage ratios. The downward march of interest rates seems to have stopped. Low interest rates are bad for PostNL's pension fund but steadily decreasing interest rates are disastrous. Now we're back to just bad.

Those reading the fine print will have noticed that for the first time ever, employees themselves will be contributing to the fund out of their gross income. This wasn't accounted for by analysts in earlier estimates of FY 2013 and FY 2014 earnings. For good reason. It wasn't knowable at the time.

What was first a cost (pension contributions) is now a source of income (employees are helping fund the deficit). I'm not going to crunch the numbers on that but I'm sure analysts are adjusting their models accordingly. It is what they do best. I mean it. Analysts are not dumb. The problem they have is that they're expected to predict the future. They don't have crystal balls though (they usually don't have balls of steel either).

2) Management has been talking about reinstating the dividends.... under the right conditions of course. That talk has probably had an effect on the stock.

3) At the time of writing, a significant number of merger arbitrage players were probably dumping the stock with no regard to the value. That created some downward pressure that is no longer there.

4) An experienced Dutch investor I know who owns the stock pointed out that PostNL will be canceling their legacy stamps in a few months. Until now, you could still use some stamps from pre-euro times. Those old but unused stamps still existed as a liability on the balance sheet. If memory serves, that was a liability of roughly 100m. Though the liability wasn't very real, writing it down to zero will have a positive effect on the balance sheet as reported. They may even run it through the earnings statement for all I know. This has generated some noise in the media.

Ok, now you should accept the congratulations. It also doubled in Euro. I bought at 1.85 and it now sells for 3.87. I have 2% of my portfolio in it, so it was not a big position per say. But hey, I am not complaining. :)

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