Tuesday, April 7, 2015

Express Carrier Sold for Billions as Competition in the Logistics Sector Reduces

FedEx Takes Over TNT Despite EU Ruling that Former UPS Bid was Non Competitive
Shipping News Feature

EUROPE – US – FedEx has announced plans to expand its European presence by purchasing 100% of the shares in TNT Express for €4.4 billion. This is the second time that the Dutch based delivery company has 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, though FedEx has emphasised that its deal held a ‘high level of deal certainty’ adding that the two companies will address any antitrust concerns.

The deal, which is expected to close in the first half of 2016, subject to antitrust approval, will see FedEx offer shareholders €8 per share, representing a premium of 33% over the closing price of 2 April 2015 and a premium of 42% over the average volume weighted price per TNT Express share of €5.63 over the last 3 calendar months. Frederick Smith, Chairman and CEO of FedEx said:

“We believe that this strategic acquisition will add significant value for FedEx shareowners, team members and customers around the globe. 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.”

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 battles to remain relevant in a saturated market with major competitors in the express delivery market including DHL as well as UPS and FedEx. Tex Gunning, CEO of TNT Express, said:

“This offer comes at a time of important transformations within TNT Express and we were fully geared to executing our stand-alone strategy. But 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. 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.”

The TNT name dates back to its founding father, Ken Thomas, the Australian who started Thomas Nationwide Transport back in 1946. In 2007 a merger between TNT Logistics and Eagle Global Logistics (EGL) saw the formation of Ceva Logistics as the TNT N.V. group was split up.