FedEx Corp’s €4.4 billion bid Tuesday for TNT Express took the world’s last large potential integrator acquisition target off the table, marking a victory in FedEx’s battle to gain market share from rival United Parcel Service Inc. In 2013, European regulators blocked a $6.9 billion bid from Atlanta-based UPS, the world’s largest package delivery company, for TNT on grounds that the combined companies would have more than 30 per cent of the European market.
The transaction would mean the combined European headquarters of the two firms would be in Amsterdam, the Netherlands. TNT Express hub in Liege will be maintained as a significant operation for the group going forward. TNT Express’ airline operations will be divested, in compliance with applicable airline ownership regulations.
If FedEx wins regulatory approval for the proposed acquisition, it would move into the No. 2 spot among package delivery services in Europe with a 17 per cent market share. That would put it ahead of UPS in Europe, but leave Deutsche Post’s DHL with the lead at 19 per cent of the market.
FedEx has a better shot at getting regulatory approval, analysts say, in part because TNT has lost share since the UPS bid and because the final outcome for Europe would not give it market dominance. The offer is expected to close in the first half of calendar year 2016.
“We believe that this strategic acquisition will add significant value for FedEx shareowners, team members and customers around the globe,” said Frederick Smith, chairman and CEO of FedEx. “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 added: “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 non-financial view, is 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,” he added.
