UPS going private again.....

Discussion in 'UPS Discussions' started by djbeckett, Mar 11, 2007.

  1. djbeckett

    djbeckett New Member

    Do you think UPS will go private again? If so, how long do you think it will take them to go back to being private?
    It sure would be nice to get the returns they UPS employees used to get on thier investments in the company back before they went public!
     
  2. HazMatMan

    HazMatMan New Member

    Don't know if they can do that. If going private, you mean take UPS off of the New York Stock Exchange, then what about all the people who bought UPS stock from Wall Street??
     
  3. Just Lurking

    Just Lurking Member


    Why not? Its the latest trend since Sarbanes-Oxley passed. There has been several in the past couple weeks (Texas Utilities @ ~$40B)
    With ~$80B market cap for UPS and roughly half in private hands (Class B) that would equate to ~$40B plus 25% premium being ~$50B needed to due the buyout. Possible but no likely.
     
  4. trickpony1

    trickpony1 Well-Known Member

    ....they will become millionaires like some management people already are. :wink:
     
  5. Dfigtree

    Dfigtree New Member

    " Why not? Its the latest trend since Sarbanes-Oxley passed."
    Just Lurking, can you explain the SOX connection to this thread?


    Sarbanes-Oxley Provisions

    The Sarbanes-Oxley Act's major provisions include the following:
    • Creation of the Public Company Accounting Oversight Board (PCAOB)
    • A requirement that public companies evaluate and disclose the effectiveness of their internal controls as they relate to financial reporting, and that independent auditors for such companies "attest" (i.e., agree, or qualify) to such disclosure
    • Certification of financial reports by chief executive officers and chief financial officers
    • Auditor independence, including outright bans on certain types of work for audit clients and pre-certification by the company's Audit Committee of all other non-audit work
    • A requirement that companies listed on stock exchanges have fully independent audit committees that oversee the relationship between the company and its auditor
    • Ban on most personal loans to any executive officer or director
    • Accelerated reporting of insider trading
    • Prohibition on insider trades during pension fund blackout periods
    • Additional disclosure
    • Enhanced criminal and civil penalties for violations of securities law
    • Significantly longer maximum jail sentences and larger fines for corporate executives who knowingly and willfully misstate financial statements, although maximum sentences are largely irrelevant because judges generally follow the Federal Sentencing Guidelines in setting actual sentences
    • Employee protections allowing those corporate fraud whistleblowers who file complaints with OSHA within 90 days to win reinstatement, back pay and benefits, compensatory damages, abatement orders, and reasonable attorney fees and costs.
     
  6. Just Lurking

    Just Lurking Member

    It has more to do with the implementation of SOX. Public companies would rather error to stay on the proper side of SOX plus cost that it imposes on them. If a company is managed fiscally and legally then SOX is just costing public companies a great deal of money.

    Only public companies are covered by SOX. Private comapnies are not. I believe that if SOX was in place in 1999 that UPS would stayed private.

    I was not implying in any way that UPS was "pumping numbers"
     
  7. steelheader69

    steelheader69 The Fishing UPS Guy

    I heard rumor that UPS was trying to buy up as much of that stock that's floating around as possible. Do believe you can go private again, just need to get your stock back. But, that was just a rumor I've heard (but one I could easily believe). Didn't UPS sell off shares so they could buy up a company that dealt with electronics???? Remember hearing something about that, but not 100% sure.
     
  8. breadbooze

    breadbooze Member

    UPS buys their shares back.. I think it was mentioned somewhere UPS would be buying back $6B in outstanding shares.
     
  9. djbeckett

    djbeckett New Member

    Let me rephrase my question. Do you think UPS will eventually buy back enough shares to go private in the next 10 years?

    UPS went public once before in 1929 and in 1933 it went back to being
    private.
    In 1999, UPS went public again.
    http://money.cnn.com/magazines/fsb/fsb_archive/2003/04/01/341024/inde...
    "...But James Casey's most enduring legacy, even more so than his
    business achievements, is the work culture at UPS. "The basic
    principle which I believe has contributed more than any other to the
    building of our business as it is today," he said in 1955, "is the
    ownership of our company by the people employed in it." Casey's belief
    in being privately held was in part a reflection of his own closely
    guarded persona. "We have kept confidential facts and figures pretty
    close to ourselves," he once said, "as most prudent people would do
    with their own private affairs." But that attitude was definitely
    shaped by what was perhaps the biggest threat UPS ever faced: Its
    abortive attempt to go public in 1929. There's little information on
    it, and Casey never liked discussing the move. "The arrangement did
    not work out entirely as contemplated" was about as expansive as he
    got, and UPS managers were able to recover all the stock by 1933.
    After that he routinely dismissed publicly traded companies as being
    owned by "absentee stockholders" and run by "hired men."

    Casey believed in employee ownership because he felt it led to a more
    committed workforce. "You treat the business like it's yours because
    it is," says Jim Kelly, a 37-year UPS vet who retired as CEO in 2002.
    Once a driver or package handler was promoted to supervisor, he or she
    became a partner and was permitted to own company stock, which could
    be sold back to UPS upon retirement.

    In the late 1990s company executives had to address how to balance
    this entrenched attitude with the company's need for the currency of
    publicly traded stock to make acquisitions. "We agonized about whether
    we could go public and maintain our corporate culture," said Kelly,
    who led an IPO in 1999. "If we couldn't reconcile the two, we wouldn't
    have done it." UPS offered just 10% of its stock to the public. ....."


    From what I have read it seems that UPS does not plan on staying public indefinitely. I think they have an exit plan back to being a private employee owned company.

    What is your take on the topic?
     
    Last edited: Mar 12, 2007
  10. Hangingon

    Hangingon New Member

    I suppose they might go private again if the major stockholders (upper mgm't and BOD) could figure out how to make even more of a profit off their shares then they were able to make when we went public. Since I never saw any large acquisitions that were made using UPS stock that we could not have made with cash we had available preIPO, it seems from my point of view the only reason we went public was to increase the value of the stock that was already owned.

    I may be mistaken (and probably am) but it seems like the only large scale use of cash UPS has every year is to buy back more stock from stockholders and continue to prop up the value of the stock.
     
  11. The only reason I would ever see UPS going private again is if the stock dropped down to al level where we could afford to buy it all back without taking on $30-$40B in debt. Highly unlikely and not to be desired. As for Sarbanne-Oxley, UPS is in pretty good shape there, even though the provisions caused a lot of work to be done.

    The big reason for going public was to establish our stock as currency, which also hearkens back to Jim Casey acquisition days. I just wonder why we havn't made an acquisition for stock yet.

    The buy back reduces shares outstanding, putting upward pressure on the price of the stock, but it also says we don't have anything better to do with the money.

    Go UPS!
    P71
     
  12. HazMatMan

    HazMatMan New Member

    I know this is off topic, but how do you start a thread?? No I don't think UPS will go private again, see I threw that in there to be not so off the topic..lol
     
  13. moreluck

    moreluck golden ticket member

    if you go to UPS Discussions......on the top of page, left side about a couple inches down it says, "Threads in Forum".....just above that is a rectangular box with a small blue arrow saying "start a new thread". That's how to do it.

    You have to give the new thread a title too.
     
  14. HazMatMan

    HazMatMan New Member

    Thank you.
     
  15. Dfigtree

    Dfigtree New Member

    " The big reason for going public was to establish our stock as currency." So, what's the little reason?
    Before you can reasonably guess as to whether UPS will go private, you must know why UPS went public. I have never seen a UPS endorsed statement as to why UPS went public. Those who know, aren't talking. And, those who are talking, don't know. Why keep it secret?
     
  16. mittam

    mittam Member

    When I worked financial services I saw a few companies that went from private to public and back to private. If done correctly and timely it can lead to a windfall profit for the company. Yes it does happen, not all that much but yes UPS probably has their comp geeks watching the stock and waiting for the appropriate time.
     
  17. dave_socal

    dave_socal PACKAGE/FEEDER

    UPS going private ? I don't know one way or the other, I do know that I'll continue to buy UPS stock . The payroll deduction purchase plan works great and if it wasn't for that OPL crap they sold us I'd have even more shares. I love the dividen check I just recieved, extra cash 4 times a year you can't beat that. I belive stock price is very cheap right now and if UPS continues its buy back policy it should go up. I'll sell when I retire or maybe not, by that time my dividen check will be huge!:thumbup1:
     
  18. Channahon

    Channahon New Member

    UPS soars past record IPO November 10, 1999: 4:30 p.m. ET

    Stock opens at 30 percent premium to IPO that raised record $5.5B
    By Staff Writer Chris Isidore [​IMG][​IMG] [​IMG][​IMG]NEW YORK (CNNfn) - United Parcel Service burst out the gate rapidly Wednesday, as the scramble for the stock by investors large and small sent it up 30 percent at the opening of trade. The stock closed its first day with a 35 percent gain.
    The Atlanta parcel-delivery giant priced the IPO at $50 a share late Tuesday, above the recently raised $47 to $49 range set only Friday. The first trade, at 10:03 a.m. on the New York Stock Exchange, was 65. The stock continued to climb, reaching a high of 70-5/16 at 11:35 a.m. before sliding to 67-1/4 at the 4 p.m. close.
    That is still up 17-1/4 or 35 percent from the IPO price and 164 percent from the price of the stock Tuesday when it was privately traded.
    The company combines a strong balance sheet, among the best profit margins in the trucking industry and a lion's share of the growing business of delivery goods purchased by consumers online, making it an attractive Internet play as well.
    "I think there's an excitement that surrounds the whole Internet component, even though it's still not the bulk of what they do," said Ben Holmes, founder of ipoPros.com, an online research firm. "But it also becomes an institutional darling almost immediately." Institutional investors oversubscribed the offering 10 times over, and with individual investor demand that climbed to 14 to 15 times oversubscription, according to a person familiar with the offering. Some 80 million shares traded Thursday, almost three-quarters of the volume of shares issued Wednesday.
    Lots of profits, but high price
    The company posted net income of $1.95 billion in the 12 months ending Sept. 30, before a $1.4 billion charge for possible payment in a tax dispute. That gives it a ratio of price to trailing earnings of 28 at the IPO price, but a ratio of almost 38 at the closing price. It had revenue of $26.3 billion for the 12-month period, far exceeding any other transportation company.
    That compares to a P/E ratio of 20 for its key competitor, FDX Corp. (FDX), owner of Federal Express and rival ground parcel carrier RPS. FDX's stock was at 43-1/4, down 3/4, at the 4 p.m. close.
    UPS had more than $2.6 billion in cash or equivalents on hand at the end of the last quarter and the best debt rating of any corporation, so it did not need the money from the IPO. Its officials said it wanted to be able make acquisitions using stock rather than cash and create a market for shares held by employees and retirees.
    The company said has generally grown through expansion of operations, rather than acquisitions, but it has used purchases to fill in holes in its global network, such as the purchase earlier this year of Challenge Air, a Miami air cargo carrier with authority that UPS lacked to fly to many South American countries.
    At the time of the IPO plans were announced, James Kelly, UPS' chairman and chief executive, mentioned the growing threat from acquisition-hungry European postal authorities that have privatized recently.
    "It really hasn't been about the money. It's been about positioning our company for the future and giving us the currency for acquisitions," Kelly said in an interview on CNNfn Wednesday after the close of trading.
    Company comments make some people think that UPS would focus on other overseas purchases with its stock. Others suggested that technology companies might be on its plate.
    "The valuations for technology companies are very high. Why would you pay cash for that, why not pay with another inflated stock?" said Ullas Naik, senior vice president, research and an IPO expert at FAC Equities.
     

  19. Cha,
    That is far too simple, be advised that we the members would be more open to grand conspiracy theories in the future. Thank you. BBB
     
  20. SeniorGeek

    SeniorGeek Below the Line

    Because it would be bad PR to admit that the IPO was mainly a way to quickly enrich the major stockholders. If the Board that set the stock price had one day declared a value of $70, regulatory agencies would have been probing every opening. The IPO allowed the tail to wag the dog, and you can't prosecute the free market.

    Back to the question about going private again: not likely. The IPO was 109 million "B" shares that could be market traded. I think this left 90% as "A" shares which can be held only by employees and retirees. Over time, shares have been moving to publicly-traded. At the end of 2005, only 42% class "A" shares remained. To buy back 58% of the 1.08 billion shares at $70/share would require about $43 billion.

    I did not know that UPS had been publicly traded from 1929 to 1933 until I read it here. (It's on the Internet, so it must be true.) There was probably a need to finance the new air shipping service. This raises questions:
    • Can 1999's publicly-traded stock issue rightfully be called an "Initial Public Offering"?
    • How did so many shares make the transition from "A" to "B"...and why?
    • Was the board thinking that 1999's stock market would be like 1929's, and they'd be able to buy back the stock at a bargain?