THE blockbuster €4.4 billion (£3.2bn) agreed takeover bid for Dutch package delivery giant TNT Express by US rival FedEx Corp is likely to sail through
European regulators, experts yesterday predicted.
This is despite a blocked €5.2bn bid for TNT Express by American group United Parcel Service (UPS) three years ago because the then-suitor already had an extensive European network.
We truly believe FedEx’s proposal is good news for all stakeholdersTex Gunning, TNT chief executive
By contrast, there is little operational overlap between FedEx Corp and TNT, with the rationale for the latest mega–tie-up being to combine the US group’s strength in other regions such as North America and Asia with the target’s European road operations.
“There is no regulatory risk whatsoever,” Andre Mulder, an analyst with Dutch broker Kepler Cheuvreux, said of the offer, which he noted was a fair one given TNT’s weaker market position.
FedEx has just 2 per cent of the European market, while TNT has 15 per cent. “FedEx made a smart move and their rivals can do virtually nothing,” Mulder said.
He added that a rival bid from a European competitor such as Deutsche Post was unlikely because it would risk hitting the 30 per cent regulatory European market share ceiling that derailed UPS’s swoop in 2012.
Both FedEx and TNT said they were “confident that anti-trust concerns, if any, can be addressed adequately in a timely fashion”.
The Dutch company has been losing market share, has cut costs, sold operations and invested in its road network in an effort to hold on to customers in a weak European market for business package deliveries.
Analysts said FedEx had timed its offer – worth 8 euros per share – shrewdly, even though it is 33 per cent above TNT’s last closing price.
Shares in TNT have lost 17 per cent in the past year, compared with a 21 per cent rise in the AEX index in Holland.
Analysts said the strong dollar also worked in the suitor’s favour, with the offer worth about $8.75 a share, compared with the $12.50 offered by UPS.
Maarten Bakker, an analyst at ABN Amro, said: “FedEx has laid on the table an attractive offer price. With FedEx always having been the most logical predator of TNT Express, we see the chances of a competing offer as slim.”
TNT employs more than 65,000 people and has 2,300 depots, with about 8,500 staff employed in the UK, including its British headquarters at Atherstone in Warwickshire and at 54 depots across the country. These include five depots in Scotland – two in Glasgow and outlets in Edinburgh, Aberdeen and Inverness.
Royal Mail shares edged up amid the latest consolidation moves in the European parcels sector.
A spokesman for Royal Mail declined to comment on whether the recently privatised group might consider making a rival offer for TNT.
TNT dates back to 1946 when Ken Thomas started his own transport business in Australia with one truck. In the 1950s Thomas Nationwide Transport developed overnight services before international expansion led to it becoming Dutch-owned in 1996.
TNT Express was created in 2011 following its separation from TNT Post. The business now operates 26,000 road vehicles and 47 aircraft.
FedEx chairman and chief executive Fred Smith said that the deal “allows us to quickly broaden our portfolio of international transportation solutions to take advantage of market trends”.
TNT’s chief executive Tex Gunning said: “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.”
FedEx and TNT said they expected the deal to close in the first half of 2016, pending shareholder approval.
Dutch postal company PostNL, a key shareholder in TNT, with a near-15 per cent stake, said it supports the bid.
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