Advantages and Disadvantages of Merging TNT with UPS

Pages: 2 (751 words) Published: May 7, 2013
Advantages and disadvantages of merging TNT with UPS

There are many famous service companies worldwide. ''Thomas Nationwide Transport'' and ''United Parcel Service'' are two of them. TNT is an international express and mail delivery service company with headquarters in Hoofddorp, Netherlands. It was founded in 1946 in Australia. It has 155,000 employees. On the other hand, UPS is an American global company headquartered in United States. It was founded in 1907. It has 398,300 employees. This essay will be a discussion of advantages and disadvantages of merging TNT with UPS from financial resources and growth and expansion. Financial resources and growth and expansion are two of the most important advantages of merging TNT with UPS. After merger, the companies will have adequate financial resources. The combined assets of the merged company will help to Increase the credit worthiness of the companies in the financial markets and Increase the bargaining power to obtain loans at a subsidized rate of interest. Moreover there are tax advantages. For example, if one of the firms involved in the merger has previously sustained net losses, those losses can be offset against the profits of the firm that it has merged with. One writer states, “An important financial reason often given for merger is economies of scale. Economies of scale simply mean that the cost of doing business, whether in manufacturing or the aforementioned operating economies, will be lower in the combined business firm,” (Financial resources advantages, 2009). Merger helps the two companies to grow and expand their business activities. This growth and expansion are achieved by making strong presence in the domestic market and entering into various foreign markets. Companies that operate internationally tend to develop at a much faster pace than those that operate locally. Internationally operating company like TNT and UPS has been able to source raw materials or work...
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