Express delivery giant FedEx Corp. and TNT Express N.V., a Dutch express delivery company, have reached a conditional agreement on a recommended all-cash offer for all issued and outstanding ordinary shares, in a transaction valuing TNT Express at an implied equity value of approximately €4.4 billion ($4.8 billion). The deal faces a number of potential hurdles, not least of which is the type of regulatory scrutiny by the European Commission that scuttled a similar offer by UPS two years ago to acquire TNT for $6.8 billion.
The acquisition, should it go through, will transform FedEx’s European capabilities and accelerate global growth.
The parties have agreed to certain non-financial covenants including:
• Existing employment terms of TNT Express will be respected.
• The European regional headquarters of the combined companies will be in Amsterdam/Hoofddorp.
• TNT Express hub in Liege will be maintained as a significant operation for the group going forward.
• TNT Express’ airline operations will be divested, in compliance with applicable airline ownership regulations.
FedEx and TNT Express anticipate that the offer will close in the first half of calendar year 2016. Both are confident that anti-trust concerns will be addressed adequately in a timely fashion, which might be wishful thinking considering how the previous UPS-TNT deal ultimately fell apart.
“We believe that this strategic acquisition will add significant value for FedEx shareowners, team members and customers around the globe,” says Frederick W. Smith, chairman and CEO of FedEx. “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.”
Tex Gunning, CEO of TNT Express, adds, “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 combined and integrated global network would feature TNT’s European road platform and Liege hub and FedEx’s presence in other regions globally, including North America and Asia. TNT’s customers would also gain access to the FedEx portfolio of solutions, including global air express, freight forwarding, contract logistics and surface transportation capabilities.
After successful completion of the offer, the TNT Express supervisory board will be composed of three new members selected by FedEx (David Binks, Mark Allen and David Cunningham, who will act as chairman) and of two members of the current supervisory board of TNT Express ( Margot Scheltema and Shemaya Levy Chocron).
FedEx and TNT Express may terminate the merger protocol in the event a bona fide third-party makes an offer which, in the reasonable opinion of the boards, is substantially more beneficial offer than FedEx's offer. In the event of a superior offer, FedEx will be given the opportunity to match such offer, in which case the merger protocol may not be terminated by TNT Express. As part of the agreement, TNT Express has entered into customary undertakings not to solicit third-party offers.
