FedEx to buy Dutch rival TNT Express for $4.8 bn

07 Apr 2015


US parcels delivery firm FedEx on Monday struck a deal to buy its Dutch rival TNT Express for $4.8 billion (€4.4 billion) as part of a plan to expand its European operations.

The proposed deal comes two years after United Parcel Service (UPS) was forced to abandon its €5.2 billion bid for TNT Express after European regulators voiced concern over competition issues. (See: UPS withdraws $6.85-bn offer for TNT Express as EC refuses approval)

The Memphis-based company is offering to pay €8 per share in cash, a 33 per cent premium on TNT's closing share price on 2 April.

The offer price is lower than the €9.50 per share bid tabled by UPS before it pulled out from the transaction.

PostNL N.V., the express service that was demerged from TNT in 2011and which holds a 14.7-per cent stake worth €642 million in TNT Express, has confirmed that it will tender its shares in favour of the deal.

FedEx and TNT Express are confident that the agreed deal would be passed by the European competition regulator, but may dispose of its airline operations TNT Airways to overcome regulatory objections. Both companies expect the transaction to be completed in the first half of next year.

The European regional headquarters of the combined companies will remain in the Netherlands, while FedEx expects to maintain the TNT Express brand "for an appropriate period".

Buying the Hoofddorp, Netherlands-based company, will give FedEx a stronghold in Europe, China, Russia, Brazil and India, most of which have high growth potential. It would put FedEx on par with Europe's market leader DHL -  a unit of Germany's Deutsche Post AG.

TNT, whose name derives from the post-war Australian company Thomas Nationwide Transport, holds a 12-per cent market share in Europe, while UPS holds 16-per cent, FedEx 5-per cent and DHL 19-per cent.

The merged company would hold a 17-per cent market share, just behind leader DHL.

TNT has fully owned operations in 65 countries and delivers documents and parcels to over 200 countries. The company has a fleet of 26,000 trucks, 47 cargo planes and has a worldwide network of more than 2,400 depots and hubs. It recorded sales of €6.68 billion in 2014.

With 2014 revenues of $47 billion, FedEx is one the largest parcels delivery company having more than 320,000 people worldwide

Frederick Smith, chairman and CEO of FedEx, said, ''This transaction allows us to quickly broaden our portfolio of international transportation solutions to take advantage of market trends – especially the continuing growth of global e-commerce – and positions FedEx for greater long-term profitable growth.''

Tex Gunning, CEO of TNT Express, said, ''This offer comes at a time of important transformations within TNT Express and we were fully geared to executing our stand-alone strategy. But while we did not solicit an acquisition, we truly believe that FedEx's proposal, both from a financial and a nonfinancial view, is good news for all stakeholders.''

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