The Atlanta-based buyer lined up the largest acquisition in its 105-year history after raising its offer 5.6% to €9.50 a share from its previous unsolicited offer of €9 a share for the Hoofddorp, Netherlands-based target. The new price represents a 53.7% premium to TNT's closing share price on Feb. 16, the day before the companies revealed they were in talks.

PostNL NV, TNT's largest shareholder with a 29.8% stake, has given its irrevocable backing to the deal, which is supported by both TNT boards.

The merger would combine the second- and third-largest high-speed parcel delivery companies in Europe with a combined market share of 39%, overtaking the 37% share of Deutsche Post AG's leader DHL Express. The enlarged entity would have revenue of more than €45 billion.

The companies said they will seek to obtain all the necessary approvals and competition clearances "as soon as practicable," with UPS planning to submit a request to the AFM Dutch markets regulator within eight weeks.

One Netherlands-based analyst cautioned that the deal may encounter competition issues. That could potentially present a buying opportunity for UPS archrival FedExCorp. for divested assets. The Memphis-based company, which has been seen as a potential counterbidder for TNT, currently controls about 10% of the European market.

"The companies face the biggest overlaps in the U.K. and to a lesser extent in the Benelux and Italy," the analyst said. "But in the end it will all depend on how regulators define the market."

UPS is looking to the deal to expand its footprint in Europe, especially in road freight, as well as to solidify its position in the fast-growing Asia Pacific and Latin American regions, while offering TNT customers "unparalleled" access to the North American market, the companies said.

TNT shares added 1.8% on the Euronext Amsterdam exchange Monday morning to trade just above the agreed offer at €9.51, putting its market value just shy of €5.17 billion. UPS shares closed Friday at $78.41, for a market value approaching $75.2 billion.

"With this combination, both UPS and TNT Express will significantly enhance their ability to serve our combined customers' complex global logistics needs," UPS Chairman and CEO Scott Davis said in a statement. "The additional capabilities and broadened global footprint will support the growth and globalizing of our customers' businesses."

UPS estimates that the transaction will deliver annualized pretax cost savings of about €400 to €550 million by the end of the fourth year after closing.

UPS expects the acquisition to be accretive to earnings in year one.

For UPS, the TNT deal eclipses the 2005 purchase of Overnite Corp. for about $1.25 billion in cash as its largest acquisition ever. The company was founded in 1907 by 19-year-old James Casey as a one-man messenger service in Seattle.

TNT, led by CEO Marie-Christine Lombard, was spun off last year from the Dutch postal operator, now doing business as PostNL.

TNT traces its origins to 1946, when Ken Thomas set up a transport business in Australia with a single truck. It has been in Dutch hands since 1996, when KPN NV, which at the time owned the privatized Dutch postal service, acquired it.

TNT, which posted a net loss of €270 million in 2011, has been under pressure from investors to turn itself around quickly. The UPS bid emerged just weeks after hedge fund Jana Partners LLC, working with Canada's Alberta Investment Management Corp., pledged to nominate a group of directors to TNT's board.

The funds, which own a combined 5% of TNT, cited "continued poor operating performance and deterioration of value" that they claimed "threatens TNT Express and all of its stakeholders."

UPS plans to finance the acquisition with $3 billion in existing cash and new debt.

Morgan Stanley; a UBS team including Robert Wolf, Simon Warshaw, Karl Knapp, Charles Otton, James Robertson and Heino Teschmacher; and Bank of America Merrill Lynch are acting as financial advisers to UPS. Goldman, Sachs & Co. is financial adviser to TNT, and Lazards' Wouter Han, Alexander Doll and Bas van der Vlist are advising TNT's supervisory board.

For legal counsel UPS turned to Freshfields Bruckhaus Deringer LLP, while TNT turned to an Allen & Overy LLP team including Jan Louis Burggraaf, Tim Stevens, Paul Glazener, Katinka Middelkoop and Lucas Brabers.