FedEx to buy TNT Express as they deliver European move
10 April 2015 by Lucinda Stacey
It is reported that, the American parcel delivery giant FedEx is to purchase TNT Express for £3.2 billion. FedEx is hoping that the takeover of its European rival will result in a significant boost to its services on the continent.
By securing the multi-billion pound deal FedEx has managed to navigate the pitfalls that befell their US rival, UPS, after UPS pulled out of a deal to purchase TNT Express two years ago following opposition from EU competition authorities. The European Commission halted the deal with UPS in 2013 on anti-competitive grounds, confirming that the proposed deal would limit customer choice and reduce the number of companies who could deliver small-packages across the continent.
Whilst UPS is still engaged in a legal battle with the Brussels-based regulator over its decision, FedEx has emphasised that there is a “high level of deal certainty” in its takeover and anticipates “no major anti-trust issues”.
Analysts are expecting few difficulties because the American company has a minimal presence in Europe, being just 2% of the European market, thus ensuring the deal will render both parties under the anti-competitive European Union legislation threshold accordingly. In comparison, UPS already had around 10% of the market in Europe resulting in its acquisition exceeding such threshold.
FedEx has made its approach for TNT Express at a time when Mergers and Acquisition (M&A) bankers have predicted that more American companies will take advantage of the strong dollar exchange rate to acquire or merge with their European rivals, solidifying or even enhancing the US-companies presence in the European markets and saturating their exposure levels in the process.
TNT Express has been in a vulnerable position to such a takeover after its shares dropped by 17% over the past year. TNT Express has undertaken a restructuring programme to hold on to its customers within the seemingly- weak European market for business package deliveries. Accordingly, TNT Express has been shedding assets and jobs to boost finances and TNT Express has said that the buyout was “good news for all stakeholders.”
Both companies have reached a conditional agreement and the deal is expected to complete sometime in 2016. The European regional headquarters of the combined companies, post-completion of the acquisition, are stated to intend to remain in the Netherlands where they are currently situated, with FedEx keen to maintain the TNT Express brand for an appropriate period. TNT Express will give FedEx access to pan-European services and the domestic UK and French markets, whilst TNT Express customers will get access to FedEx’s global distribution platform.
If, like FedEx or TNT Express, your company is part of an acquisition and needs advice on how to proceed with the acquisition or merger, advice as to its structure and alternative structure models, as well as how to potentially innovate business, protect innovative ideas with Intellectual Property Rights or any general advice, please contact our Corporate Commercial Department on 01245 584515 or [email protected].
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