FedEx, one of the largest delivery companies in the world recently announced plans to expand its presence in the global market, particularly in Europe, also making public their intentions of buying their Dutch competitor TNT Express.
The potential takeover would be an all-cash deal where the Dutch company is valued at $4.8 billion which implies a price of approximately 8 euros per share. Both sides released the information adding that the offer is priced at 33 percent premium when compared to its current value. Both sides expressed the belief that the deal could be successfully completed by the first half of 2016.
The deal would also mean that the European headquarters for both companies would be in Amsterdam. The deal would also be funded by a new, more convenient debt agreement. After the official takeover news was released TNT shares grew by 30 percent.
The acquisition of TNT would mean that FedEx will significantly increase its European potential, and help grow the global worth of the company while giving its customers a better connected global network. Chairman and CEO of FedEx, Frederick Smith declared that this
“strategic acquisition” will mark a huge jump in the value of FedEx shares while also solidifying the international transportation portfolio of the company. The move would help Fed ex better speculate and address all upcoming market trends.
According to the current deal the employment terms for all TNT Express employees would remain unchanged while the airline operations would be divested. The deal comes on the back of a failed takeover bid by UPS in 2013. Antitrust regulators from the EU blocked a potential takeover of TNT in 2013 by UPS, arguing that the deal didn’t provide enough leeway possibly leading to a poorer result for consumers.
Both FedEx and TNT Express representatives commented on the antitrust situation, saying that any possible problems could be addressed quickly and efficiently.
David Binks, the President of FedEx Europe commented on the possible takeover saying that regulators would go with the deal as it would create a third major competitor in the EU zone, thus benefiting the entire delivery market. Binks also added that TNT Express would fit perfectly in the FedEx family due to the company’s strategy, work ethic and general way of doing business.
Some market experts found the TNT Express takeover beneficial as it would help the Dutch company deal with its plummeting profit margins and high costs.