The Memphis-based parcel delivery service said the $4.8 billion acquisition of Europe’s third-largest delivery company entered the home stretch with approval by Ministry of Commerce People’s Republic of China. The acquisition is expected to close by June 30.
The company, which withdrew from the $17.8 billion pension fund as part of a collective bargaining agreement with the International Brotherhood of Teamsters at the end of 2007, might also be required to pay between $3.2 billion and $3.8 billion in benefit payments if the benefit reduction is approved by the Treasury Department.
A “backstop agreement” in that CBA stated that in the event “at some point in the future if Central States ever lawfully cut benefits to that group, UPS would provide a supplemental retiree benefit,” UPS spokesman Steve Gaut said. “As a result of that backstop agreement now, we are potentially liable for a future payment to those (UPS) employees that are retirees that are eligible, associated with what that benefit cut turns out to be,” Mr. Gaut said.
Treasury considers change to keep pension fund solvent
Courier profit tops analysts’ estimates on strong U.S. results
United Parcel Service Inc. warned it may have to take a charge of as much as $3.8 billion related to a potential pension-fund obligation.
The cost would be triggered if the U.S. Treasury Department approves benefit cuts to protect the solvency of the Central States Pension Fund, UPS executives said Thursday. UPS pulled out of the fund in 2007 but agreed to make up any losses its remaining members experienced.
- 1Q Earnings per Share Increases 13% to $1.27
- International Operating Profit Jumps 15%
- U.S. Domestic Expands Operating Margin as Cost per Unit Drops 1.9%
- Revenue Growth Slowed by Changes in Fuel and Currency
- Affirms Full-Year 2016 EPS Guidance of $5.70 to $5.90
Public-sector strikes in Germany targeting airports are set to disrupt operations at United Parcel Service Inc. Wednesday, potentially stranding packages alongside passengers as hundreds of airport employees are expected to walk off the job in a wage dispute.
UPS’s largest European air hub is at the Cologne Bonn Airport. A company spokesman said UPS has yet to determine what effect the strike might have on operations, but is taking action to mitigate delays.