US Delivery Company FedEx Buys TNT Express for €4.4bn

American parcel delivery service will takeover Dutch logistics firm two years after its failed tie-up with UPS.


FedEx, the American parcel delivery company, has agreed a deal to buy its European rival TNT Express for €4.4bn (£3.2bn) in move to boost its services on the continent.

FedEx is offering TNT shareholders €8 per share in cash, a third higher than the Dutch firm's closing price last week. TNT shares have leapt by 30pc on the back of the new deal, which already has support from the company's board and its major shareholder, PostNL, which owns a 14.7pc stake.

The takeover comes two years after FedEx's US rival UPS had a €5.2bn move to buy TNT blocked by European competition regulators.

However, FedEx emphasised that there is a "high level of deal certainty" in its takeover and it anticipates "no major anti-trust issues".

The European Commission had called a halt to TNT's tie-up with UPS in 2013 on the grounds that the deal would limit customer choice and reduce the number of companies who could deliver small-packages across the continent. UPS is still engaged in a legal battle with the Brussels-based regulator over its decision.

Analysts said that they expected FedEx and TNT to encounter little antitrust difficulties because the American company had a minimal presence in Europe.

FedEx, which is the world's largest cargo airline operator, has just 2pc of the European market while TNT has a market share of around 15pc, according to Kepler Cheuvreux analyst Andre Mulder. By comparison, UPS had just below 10pc.

"There is no regulatory risk as a combined TNT and FedEX has below a critical level of 25pc market share when remedies are deemed necessary", Mr Mulder said.

FedEx's has made its approach at a time when M&A bankers have predicted that more American companies will take advantage of a strong dollar to pick up their European rivals on the cheap. Analysts said that due to currency effects FedEx €8 a share offer is worth $8.75 compared to when UPS' €9.50 per share offer was worth €12.50 in dollar terms in 2012.

TNT has also been vulnerable to another takeover approach after its shares have dropped by 17pc over the past year, underperforming the wider Amsterdam market.

David Binks, FedEx's Euroean president, said that the US company had approach TNT a couple of weeks ago with the deal and both sides had worked over Easter to negotiate terms that were acceptable to all stakeholders.

"The market conditions provided the right time for us to approach and give an opportunity for FedEx to signifcanlty build its European ground delivery network", Mr Binks said.

TNT has been shedding assets and jobs to bolster its finances and warned that its main market would continue to be tough this year, after struggling with four straight annual losses. Howvever, Mr Binks said it was too early too comment on further job losses but redundancies would be minimal as the deal was "complementary rather than a combination of overlapping businesses".

TNT will significantly bolster FedEx's European air and ground network.FedEx'sef executive Fred Smith set out a plan two years ago to boost its European profits by $1.7bn.

Mr Smith said: "This transaction allows us to quickly broaden our portfolio of international transportation solutions to take advantage of market trend."

TNT said the buyout was "good news for all stakeholders".

"Our people and customers can profit from the true global reach and expanded propositions, while with this offer our shareholders can already reap benefits today that otherwise would only have been available in the longer run," said Tex Gunning, who took over as chief executive of the Dutch company after the failed UPS deal.


Source: The Telegraph


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