Tuesday, May 31, 2016

Multi-Billion Dollar Freight and Logistics Deal Given Final All Clear

Acquisition but No Name Changes - As Yet
Shipping News Feature
US – EUROPE – WORLDWIDE – Having received all the requisite antitrust approvals from regulators around the world, American parcel giant FedEx has now officially acquired its Netherlands based rival TNT Express in a massive freight and logistics deal. The €4.4 billion acquisition will see the existing FedEx portfolio expand with the addition of a European road network and the TNT brand name remaining for the ‘foreseeable future’.

The new deal has attracted some interest, particularly from the US investment community. The extra $7 billion in revenue which FedEx receives represents around 13% of next years anticipated £53 billion revenue for the group, at a cost of ‘just’ $4.9 billion. Much talk of synergies means doubtless a cutting of costs, and presumably staff, in some areas, but overall the arrangement should enable both to expand into areas of the global market where they were traditionally under represented.

This was the second time that the Dutch based delivery company had been lined up for a possible takeover by a major US express freight and logistics firm after the European Union objected to a bid by UPS in 2013, citing anti-competition grounds. In 2012, UPS offered TNT shareholders €9.50 per ordinary share which at that time represented a premium of 53.7% on the TNT stock price of €6.18. After the deal fell through, TNT started selling off divisions and revamping its business as it battled to remain relevant in a saturated market with major competitors in the express delivery sector including DHL as well as UPS and FedEx.

In order to satisfy some of the conditions of competition regulations worldwide, TNT signed an agreement to sell its airline operations TNT Airways and Pan Air Líneas Aéreas to Dublin headquartered ASL Aviation Group, once the FedEx/TNT deal was official.