By Maarten Van Tartwijk
AMSTERDAM-- FedEx Corp. on Tuesday said it would buy Dutch
parcel-delivery firm TNT Express NV for about EUR4.4 billion ($4.8
billion) to expand its footprint in Europe.
The deal comes two years after a proposed $7 billion takeover of
TNT by U.S. rival United Parcel Service Inc. fell apart because of
antitrust issues, and as the Dutch company struggles to compete
with larger rivals.
FedEx and TNT said the all-cash deal had been approved by the
Dutch company's board and that the EUR8-a-share offer price
represents a premium of 33% over TNT's share price on April 2.
The companies said they don't foresee major antitrust hurdles
and that they expect the deal to get the green light from the
European Union's competition regulator.
Shares in TNT jumped 30% to EUR7.80 on the news, making it one
of the biggest gainers in Europe.
FedEx Express Chief Executive David Bronczek said the deal with
TNT could strengthen FedEx's presence in Europe thanks to the Dutch
company's extensive road network in the region. The U.S. company
also hopes the deal will enable it to benefit from the continued
growth of global e-commerce.
Mr. Bronczek said an agreement was struck after only six weeks
of negotiations and that Fedex's appetite was fueled by a stronger
dollar against the euro and signs of a strengthening European
economy. "This is a match made in heaven," he said at a news
conference in Amsterdam.
The move follows a series of smaller acquisitions that the
delivery-package giant has made in recent months. In January, FedEx
paid $1.4 billion for Genco Distribution Systems Inc., a
third-party logistics provider that specializes in the
product-returns business. And in December, the company said it
acquired Bongo International, a provider of services for
international e-commerce orders and shipments.
Analysts don't expect FedEx's bid to be hit with the same
competition issues that dashed the UPS merger because of FedEx's
smaller footprint in Europe. The offer will nevertheless face
scrutiny from regulators.
In 2013, the European Commission, the EU's executive arm,
blocked a proposed merger between UPS and TNT, saying the
transaction would harm competition in more than a dozen member
states. Concessions offered by UPS, including asset sales, were
deemed inadequate at the time.
Mr. Bronczek expressed confidence that FedEx's bid would get the
green light because the combination with TNT could even boost
competition in the region.
"There are currently two strong players in the marketplace. Now
there will be three," he said. Talks with officials in Brussels
have yet to begin, he said.
The comments were echoed by TNT's chief executive, Tex Gunning.
"This deal is much better and simpler" compared with the UPS deal,
he said. "There is little overlap, our businesses are
complementary."
Ever since the deal with UPS fell apart, TNT has struggled to
find a new stand-alone strategy. In February, the company reported
its fourth consecutive annual loss amid sluggish growth,
operational setbacks and stiff competition. Analysts blamed its
problems on its reliance on Europe and lack of a global
network.
It made the Dutch company a logical target for FedEx, said
Kepler Cheuvreux, an analyst Andre Mulder.
"FedEx had a problem in Europe. Rather than going into a lengthy
and painful process to build a full network of its own, the
acquisition of TNT is a logical one as this is achieved in one
stroke," he said.
Dutch mail company PostNL NV, which has a 14.7% stake in TNT,
said it supports the offer.
The deal is expected to close in the first six months of 2016.
FedEx has agreed to pay TNT a $200 million breakup fee if the deal
falls apart.
Write to Maarten Van Tartwijk at maarten.vantartwijk@wsj.com
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