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FedEx to buy TNT Express for $4.8 billion


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Fleet Owner / April 7, 2015

In a move that will surely realign the global parcel delivery market, FedEx Corp. plans to buy TNT Express N.V. in a $4.8 billion cash deal.

Both firms noted in a statement that they expect to wrap up the acquisition within the first six months of 2016 and don’t foresee any major anti-trust complications.

Both FedEx and TNT also agreed to several caveats as part of this deal:

  • Existing employment terms of TNT Express will be respected;.
  • The European regional headquarters of the combined companies will be in Amsterdam/Hoofddorp in the Netherlands;
  • TNT Express’ hub in Liege, Belgium, will be maintained as a significant operation for the group going forward;
  • TNT Express’ airline operations will be sold off, in compliance with applicable airline ownership regulations.

“We believe that this strategic acquisition will add significant value for FedEx shareowners, team members and customers around the globe,” noted Frederick Smith, FedEx’s chairman and CEO, in a statement.

“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,” he added.

While Tex Gunning, CEO of TNT Express, noted that his company was “fully geared to execute our stand-alone strategy” and “did not solicit an acquisition” proposal, he believes the FedEx deal is a good one for all involved.

“We truly believe that FedEx’s proposal – both from a financial and a non-financial view – is good news for all stakeholders,” Gunning said in a statement. “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.”

This deal also follows an aborted attempt by United Parcel Service to acquire TNT Express nearly two years ago; a deal nixed by the European Commission over anti-competitive issues.

Both FedEx and TNT Express highlighted several strategic advantages to their dea, should it be approved:

  • Their customers should enjoy broader global access via a “considerably enhanced” integrated global network;
  • Specific advantages include the alignment of TNT Express’ European road platform and Liege hub with FedEx’s operations around the world, especially North America and Asia;
  • TNT Express customers would also benefit from access to the FedEx portfolio of solutions, including global air express, freight forwarding, contract logistics and surface transportation capabilities;
  • FedEx plans to keep strengthening TNT Express with investment capacity, sector expertise and global scope.

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UPS drops bid to buy TNT Express

Fleet Owner / January 15, 2013

United Parcel Service, Inc. (UPS) has abandoned its $6.9-billion (€5.2-billion) attempt to acquire Amsterdam-based TNT Express NV (TNTE). The Dutch firm is the second-largest package delivery firm in Europe and also has operations in emerging markets.

UPS initiated the bid last March to better compete in Europe with the continent’s largest-package delivery operation, Deutsche Post’s DHL. UPS wanted to buy TNTE both for its European network and its assets in Asia and Latin America, Reuters reported.

UPS announced yesterday that the European Commission (EC) had “informed UPS and TNTE that it is “working on a decision to prohibit the proposed acquisition of TNTE” as it determined the takeover would make the business sector less competitive by reducing the number of players serving it.

TNTE stated that on January 11, it and UPS “met with EC’s case team investigating the proposed acquisition… The case team informed the companies that on the basis of UPS’s current remedy proposal it is working towards proposing a prohibition decision.”

Responding to the EC’s concern, UPS had offered to sell parts of the company’s small package operations and airline assets, as reported by the Associated Press.

Rival firms FedEx and DHL had both lobbied the EC to stop the takeover, a banking source told Reuters. However, UPS and TNTE failed to secure buyers and the planned asset sales were not enough to satisfy European Union officials.

“One of the key sticking points to the proposed UPS/TNTE deal falling through was that UPS/TNTE were not able to find a buyer for certain assets that needed to be sold off in order to meet the EC's competition requirements,” pointed out analyst Peter Nesvold of Jefferies & Co. He also said that “UPS, the most likely buyer of those assets, did not get involved and indirectly helped the deal fall through.”

Although UPS must pay TNTE a $265.5-million (€200-million) termination fee, the European firm remains on shaky ground. The news caused to its share price to fall at one point yesterday by 50% before closing 42% lower.

In a statement, TNTE said it “regrets this situation, having believed the merger was feasible and beneficial for all stakeholders.” The company also said the “protracted merger process has been a distraction for management” and that “management will provide an update on its strategy in due course.”

“We are extremely disappointed with the European Commission’s position,” said UPS CEO D. Scott Davis in a statement. “We proposed significant and tangible remedies designed to address the European Commission’s concerns with the transaction.

“The combined company would have been transformative for the logistics industry, bringing meaningful benefits to consumers and customers around the world, while supporting growth in Europe in particular,” Davis added.

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It's significant that this acquisition will make FDX a partially unionized carrier, which is a veritable "sea change" for FDX. This assumes the merger doesn't fail for the same antitrust reasons TNT's acquisition by UPS did...

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TNT was started in Australia after WW2 by Ken Thomas ( a returned soldier ) in Sydney Australia, trucks were orange and white. Many of it's drivers were former WW2 pilots who could not find work as pilots and the truck driving paid maybe 3 or 4 times what a commercial pilot was paid during late 1940's and 1950's. All senior TNT mangers were former truck drivers that progressed through the company, very few had formal education and they were good operators. TNT also operated Kwikasair and Comet Overnight in various countries. Over time during 1970's it became a world wide company, public listed on Australian Stock Exchange. TNT was Thomas National Transport. It got into trouble in the late 1980's under new management (wrongly Ken Thomas and his team were pushed out of the company) when it bought a fleet of BAE 46 jet aircraft to compete with the Dutch Post Office. TNT also owned Ansett Airlines with NEWS Corp (Rupert Murdoch) which ran into trouble because they bled the very profitable airline dry to fund their respective overseas expansions. Eventually Ansett was sold to Air New Zealand and it stopped operations around 2000. TNT failed, the Dutch post office bought most of TNT world wide, sold many unwanted parts. However Murdoch's NEWS Corp prospered. At least the name TNT continues - some 70 years. Who remembers the AC/DC ( also an Aussie rock band) song TNT!!!!!!

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FedEx takeover creates tougher competitor for Toll, Australia Post

Financial Review / April 8, 2015

FedEx's $6.3 billion takeover of rival courier group TNT Express will create fresh challenges for Australia Post and Toll Holdings as the Australian logistics group finalises its own sale to Japan Post.

The US's FedEx plans to complete its acquisition of the Netherlands' TNT Express in the first half of the year if the proposed deal, which was announced in the US and Europe on Tuesday, is approved by regulators.

Toll, which agreed in February to be acquired by Japan Post for $6.5 billion, has been planning on taking advantage of the Japanese group's transportation management skills and technology to boost its domestic delivery business, and compete more aggressively with Australia Post in delivering parcels ordered online.

But FedEx – which is already the world's fourth largest logistics company behind Deutsche Post, the US Postal Service and UPS – will become an even stronger competitor in Australia if its purchase of TNT Express goes ahead.

"Market shares will shift significantly in the next 12 to 18 months," said Ross MacMillan, Asia Pacific head of industrial equities research at Morningstar. "Australia Post has the most to lose but Toll has a real battle on its hands as well."

Toll currently dominates the local market for courier pick up and delivery services with an 8.8 per cent market share, ahead of DHL Express, which has a 6.7 per cent market share, according to IBISWorld.

The local market, which has $5.3 billion in annual revenues, is highly fragmented, with TNT Australia, FedEx, Star Track Express (owned by Australia Post) and UPS all having shares less than 5 per cent.

Market share changes

TNT declined to comment on how its proposed merger sale would change its market share. TNT's Australian business made a pre-tax loss of $17.7 million in 2013 while FedEx's Australian business made a pre-tax profit of $48.7 million in the same year, according to IBISWorld. FedEx increased its local pre-tax profit to $72.5 million in 2014.

FedEx's US executives have already signalled that they plan to use the TNT acquisition to create a more efficient global network, reducing pickup and delivery costs, particularly with international parcel deliveries acquired through online shopping.

"We think there is a tremendous opportunity in cross-border e-commerce," FedEx's global executive vice president of market development and corporate communications, Michael Glenn, told analysts this week.

FedEx does not currently provide domestic express services in Australia and is focused solely on the international market. It uses its own aircraft to fly between Sydney and a regional hub in Guangzhou, where packages are sorted for delivery elsewhere to the world, and also uses commercial aircraft.

But it operates 250 trucks and vans in Australia, and has couriers in most capital cities as well as Newcastle and Wollongong.

FedEx is keen to take advantage of TNT's vehicle network as consumers opt for cheaper forms of delivery via trucks and ships instead of more expensive air services.

Toll shareholders are due to vote on the proposed sale of the company at $9.04 per share to Japan Post on May 13. Independent experts Grant Samuel have estimated the full underlying value of Toll at between $8.22 and $9.10 per share.

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