FedEx is to acquire TNT Express in a deal worth €4.4bn, as part of the US group’s ambitions to grow significantly across Europe, creating a single entity large enough to go head-to-head with DHL and UPS.
Two years ago, UPS dropped a planned €5.5bn take-over of TNT after the European Commission indicated it would not sanction the deal, as it could reduce competition in the European delivery services market. In statements issued this morning, FedEx and TNT said they expect the deal to be viewed as a step forward for competitiveness in the European market.
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 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.”
Frederick W. Smith, Chairman and CEO of FedEx, said: “We believe that this strategic acquisition will add significant value for FedEx shareowners, team members and customers around the globe. 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.”
The FedEx offer of €8 per share is 33% higher than TNT Express’ closing share price (last Thursday before the Easter break). It is this €8 per share figure that gives the acquisition of TNT Express the implied equity value of €4.4bn. The failed UPS bid in 2013 was based on an offer of €9.50 per TNT share.
PostNL, which was partially spun out from TNT Express through a series of divestments in 2011 and 2013, will tender its 14.7% stake in TNT for sale as part of the deal. TNT will also have to sell its airline operations.
The new headquarters for the merged business will be in Hoofddorp (Amsterdam) and in the statement issued this morning said: “The combined companies will cooperate to avoid any significant redundancies in the global or Dutch work forces. The combined companies will foster a culture of excellence, where qualified employees will be offered attractive training and national and international career progression based on available opportunities.”