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Conclusion of Vision 2015: separation


On 3 December 2009, TNT launched its Vision 2015 strategy, which identified five focus areas, one in Mail and four in Express.

During 2010, as part of the Vision 2015 strategy, the Board of Management of TNT concluded that it was in the best interest of the company, its shareholders and other stakeholders to separate TNT’s divisions into two separate companies: Mail and Express. The intention to separate was first announced on 2 August 2010, and detailed plans were presented on 2 December 2010. Subject to shareholder approval, the demerger is scheduled to take place by the end of May 2011. As of January 2011, the internal legal and organisational separation was completed.

The main reasons for separation are the increasingly divergent strategic profiles of the two divisions and the limited synergies existing between them. Mail is faced with a continuously declining mail market within the Netherlands and has to focus on sustaining a solid cash flow and operational efficiency, as well as business renewal. The challenges and opportunities for Express are to leverage its existing strong European networks, to improve yield, to continue to grow the intercontinental business from and to Europe, to grow into adjacent markets, and to build on its first mover advantage and continue to grow in emerging markets.

The separation will also enable greater focus on each business, with single-business investment discipline and capital allocation, as well as leaner, more flexible organisations. Externally, separation is intended to provide more transparency as well as two distinct investment opportunities for shareholders and a clear choice of investment between a value stock (Mail) and a growth stock (Express). Separation will also facilitate participation in sector consolidation and acquisitions.

The Board of Management considers a strong and focused management team coupled with a solid capital structure of crucial importance to both Mail and Express after the separation. These strong platforms will enable successful implementation of their respective strategies, for the benefit of their shareholders and all other stakeholders.

Separation requirements

The separation of the Mail and Express divisions is only possible if certain requirements are met. Specifically, separation requires positive TNT N.V. distributable equity at and following demerger (absence of ‘equity gap’) and solid funding positions (target BBB+ credit rating) for Express and Mail (absence of ‘funding gap’).

Equity gap

The demerger requires positive distributable equity on TNT N.V.’s balance sheet and the demerger is only possible up to the level of the positive distributable equity. As estimated at the time of the announcement of the demerger in December 2010, a 100% demerger of the Express division would result in a shortfall of around €900 million.

In addition, it was foreseen that as a direct result of changes to be introduced in the IAS 19 ‘Employee benefits’ accounting standard, TNT N.V. could face an additional write-down against equity in 2012 or 2013 of €900 million (which was estimated for illustrative purposes on the status of pension accounts as of the third quarter of 2010). The impact of this change must be anticipated at demerger because negative equity in the future would constrain TNT N.V. (Mail)’s ability to make dividend payments and raise listing issues.

Funding gap

Based on an assumed TNT N.V. net debt at separation of around €1,200 million, the additional capital required to maintain a BBB+ (S&P) credit rating for Express and Mail was estimated to be between €700 million and €900 million. The aggregate net debt capacity of Express and Mail is lower than that of the current Group since the two separate companies are smaller and less diversified than the two combined and because of the cyclical nature of Express and restructuring pressure in Mail.

Separation structure

Based on an extensive review of alternatives, TNT concluded that the optimal solution, which met separation requirements, would create two independently listed entities through the statutory demerger of the Express activities by TNT N.V., with the retention of a minority financial shareholding in Express by TNT N.V. (Mail) of 29.9%.

Demerger structure

Demerger structure

Demerger structure
TNT N.V. Mail TNT N.V. Mail
  • Mail in NL
  • Parcels NL/Belgium
  • International
  • Real Estate
  • Dutch Pension Plans
Express TNT Express
  • Europe and MEA
  • Americas
  • Other Networks
  • TNT Brand

The sole objective of the retained minority shareholding is to secure positive distributable equity in the demerger accounts of TNT N.V. at the time of the demerger. The subsequent value step-up for accounting purposes after the demerger will also contribute to offset the assumed potential future equity write-down as a result of the revision of IAS 19 ‘Employee Benefits.’

Sell-down of the retained minority shareholding is anticipated over time, with proceeds to be used to reduce the debt in TNT N.V. (Mail). Depending on the equity position, any excess capital will be returned to shareholders. The reduction in debt and possible capital returns to shareholders of TNT N.V. (Mail) is required in order to reach the target credit rating of BBB+.

As part of the arrangements relating to the demerger, it is expected that TNT N.V. (Mail) will enter into contractual arrangements with Express regarding the shareholding retained by TNT N.V. (Mail) in Express. These will include arrangements for TNT N.V. (Mail) to offer its Express shares in the event of a recommended/non-recommended public offer for the shares in Express and other arrangements in the event of a (potential) sale by TNT N.V. (Mail) of such shareholding. Provisions will also be included on the exchange of certain information enabling TNT N.V (Mail) and Express to fulfil their respective duties and disclosure obligations. Finally, specific arrangements will be included to prevent TNT N.V. (Mail) from unintentionally requiring it to make a mandatory offer. All these arrangements will be included in a so-called ‘Relationship Agreement’, the main elements of which will be shared with the shareholders prior to the anticipated demerger.

The Board of Management and Supervisory Board concluded that the proposed transaction is the best separation alternative as it:

Two stand-alone companies

The demerger of Express from TNT N.V. will result in two strong stand-alone companies: TNT N.V. (Mail) and Express. TNT N.V. (Mail) and Express will be separately listed on the Euronext Amsterdam stock exchange. Each separate company will have its own Board of Management and Supervisory Board.

Following demerger, both companies will follow new reporting requirements with changes in segment reporting. TNT N.V. (Mail)’s segments will be (1) Mail in the Netherlands, (2) Parcels, and (3) International. Express’ segments will be (1) Europe, Middle East and Africa (Europe & MEA), (2) Asia-Pacific (ASPAC), (3) Americas, and (4) Other Networks.

TNT N.V. (Mail) continues to fall under the rules of the large company regime while Express will be exempt from it. In this annual report, Express is reported as a discontinued operation. For further details on Express please refer to the separate supplementary report.


To ensure a smooth transition the Board of Management and Supervisory Board have agreed interim governance rules to govern the interests of the group until demerger. Preparation of the demerger transaction will continue unabatedly, with filing of documentation planned by mid-April. At the Annual General Meeting of Shareholders planned for 25 May 2011, the shareholders will vote on the proposal. The separation is planned to become effective shortly thereafter.