FedEx to buy TNT for $4.8 billion to take on rivals in Europe

Tue Apr 7, 2015 9:58am EDT
 
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By Toby Sterling and Thomas Escritt

AMSTERDAM (Reuters) - FedEx Corp (FDX.N: Quote) is to buy Dutch package delivery firm TNT Express TNTE.AS for an agreed 4.4 billion euros ($4.8 billion), stepping up the challenge to rivals United Parcel Service (UPS.N: Quote) and Deutsche Post (DPWGn.DE: Quote) in Europe.

European regulators blocked a 2013 takeover of TNT by UPS due to concerns it would stifle competition, but analysts and executives said on Tuesday 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. (FDX.N: Quote) 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 9.5 euros.

Memphis, Tennessee-based FedEx is financing the deal with debt, the latest company to take advantage of low interest rates.

TNT shares were up nearly 30 percent on Tuesday, close to FedEx's bid price, while FedEx stock rose 3.6 percent.   Continued...

 
David Bronczek, CEO of FedEx Express, speaks during a news conference in Amsterdam April 7,  2015. REUTERS/Toussaint Kluiters/United Photos