FedEx to buy TNT Express for $4.8 billion

APR 7, 2015: FedEx announced that it has offered to buy Dutch package delivery company TNT Express for 4.4 billion Euros ($4.8 billion) in cash in a deal supported by the management boards of both companies.

In a joint statement the companies said they had reached “conditional agreement” on a cash offer by FedEx of €8 per share, giving TNT an equity value of €4.4 billion

As part of the agreement TNT will sell its airline operations. PostNL, which was spun out from TNT Express in 2011 and holds a 14.7 percent stake in the company, supports the takeover, according to the statement.

“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,” said Frederick Smith, Chairman and CEO of FedEx.

Tex Gunning, chief executive of TNT Express, said the offer comes “at a time of important transformations within TNT Express” and added that “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,” Gunning added.

The Dutch group began scaling back its global operations in 2013 to concentrate on its core European market, but warned on profits as the Eurozone economy stuttered. The company warned of “adverse trading conditions” in its core western Europe markets in 2015, and told investors not to expect an improvement in performance until 2016.
TNT made revenues of €6.7bn ($7.3bn) in 2014 with around two-thirds generated in Europe; a fraction of the $47bn (€43bn) turnover of its US rival. It delivers around a million consignments daily ranging from documents and parcels to palletised freight. Its European road network connects over 40 countries through 19 road hubs and over 550 delivery depots.