The bid, which would create one of the four largest transport companies in the world, has been unanimously recommended by TNT's board. TNT has been performing poorly in recent years.
David Mortimer, TNT's chief executive, said yesterday: "This proposal represents an outstanding opportunity to create a strong global transportation group."
Speaking in Sydney, Wim Dik, chief executive of KPN, said one of KPN's key objectives from the proposed takeover would be to expand in Asia. The Dutch company, which until 1989 was owned by the Netherlands government, has a wide presence in Europe and is listed on stock exchanges in the Netherlands, Britain, New York and Frankfurt. But its exposure to the rapidly expanding Asian market is limited.
"This is a gigantic step for us," Mr Dik said. "It fits nicely in the strategy we have outlined to grow in markets outside of Europe and to grow quickly. There is a big shakeout going on and we want to be there for it."
The announcement on Wednesday morning caught the Australian market by surprise. TNT shares soared 80 cents, or 49 per cent, to close at A$2.43.
In Holland, too, the market jumped higher as news of the bid was absorbed. Dealers welcomed the move, saying it gave the Dutch telecom giant more of global position, adding transport and logistics to its core telecoms activity.
KPN shares closed up 1.70 guilders at 60.60, although still below the year's peak of 68.50.
The bid came only days after TNT completed the sale of its 50 per cent stake in Ansett Australia Holdings, an airline, to Air New Zealand for A$470m.
TNT had blamed weak returns from Ansett and certain other assets for a sharp 75 per cent fall in its after-tax earnings last year to A$9.8m.
Mr Dik said KPN had waited for the Ansett sale to be finalised before making its bid. KPN will finance its takeover with a A$1.7bn revolving credit facility underwritten by Goldman Sachs, its corporate adviser.
The main assets of the merged company will include: TNT's domestic time-sensitive distribution and logistics businesses in Italy, Germany, Britain, France, the Americas, Australia and Asia; KPN's PTT Post domestic time-sensitive distribution and logistics businesses in the Netherlands, Germany, Belgium, Austria and Denmark as well as its international mail service; and GD Express Worldwide, an international time-sensitive freight business that is 50 per cent owned by TNT and 50 per cent by GD Net, which is in turn is 54 per cent owned by KPN and 46 per cent by Swedish Posten.Reuse content