FedEx takes on rivals in Europe with TNT deal
Print Edition
FEDEX Corp is to buy Dutch package delivery firm TNT Express for an agreed 4.4 billion euros (US$4.8 billion), stepping up the challenge to rivals United Parcel Service and Deutsche Post in Europe.
European regulators blocked a 2013 takeover of TNT by UPS due to concerns it would stifle competition, but analysts and executives said yesterday FedEx, with its strong air fleet, would complement TNT’s sizeable European road network.
“Europe, despite the fact that there has been low growth, is still an enormous market both for import and export,” FedEx Corp’s Chief Executive Fred Smith told analysts. TNT gives FedEx access to pan-European service and the domestic UK and French markets, areas where it is not yet a big player, Smith said, while TNT customers will get access to FedEx’s global distribution platform.
ING analysts estimate Deutsche Post’s DHL currently has a 19 percent market share in Europe, followed by UPS with 16 percent, TNT with 12 percent and FedEx at 5 percent — meaning the deal could catapult FedEx to second place.
FedEx will offer 8 euros in cash per ordinary TNT share — a 33 percent premium on last week’s close, though below UPS’s 2013 offer of 9.50 euros.
Memphis-based FedEx is financing the deal with debt, the latest company to take advantage of low interest rates.
“FedEx has laid on the table an attractive offer price,” said ABN Amro analyst Maarten Bakker, who has a “hold” rating on TNT shares.
“With FedEx having always been the most logical predator of TNT Express, we see the chances of a competing offer as slim.”
FedEx finance chief Alan Graf said the company would “be very aggressive on spending on integration in the first year,” and the deal would create unspecified cost synergies.
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