FedEx bids for Dutch rival in global expansion drive
FedEx office in downtown Nairobi. FedEx and TNT Express both have operations in Kenya. PHOTO | DIANA NGILA
US parcels delivery firm, FedEx Corp, plans to buy its Dutch rival TNT Express for an estimated $4.8 billion (Sh433.1 billion) as it aims to grow its footprint in the European market.
Both FedEx and TNT Express have operations in Kenya and are among the preferred shippers for international parcels alongside DHL and the Postal Corporation of Kenya’s expedited mail services (EMS).
FedEx said on Tuesday it will offer eight euros (Sh793.2) in cash per ordinary TNT Express share, in a deal that would give the US firm a head start where main rival United Parcel Services (UPS) failed two years ago after its bid for the Dutch firm was blocked on competition concerns.
UPS pulled out of the deal in 2013 following opposition from EU competition authorities, saying it saw “no realistic prospect” of approval for its bid from the European Commission. Following the collapsed buyout by UPS, TNT started a restructuring programme, cutting costs, selling operations and investing heavily in its road network to retain customers amid weak market conditions for the parcel deliveries in Europe.
FedEx and TNT Express expect the deal to be completed in the first half of 2016. “
The combined companies would be a strong global competitor in the transportation and logistics industry, drawing on the considerable and complementary strengths of both FedEx and TNT Express,” FedEx said in a statement.
The two companies said the deal has been unanimously recommended by TNT Express’ supervisory board, adding that TNT’s largest shareholder, PostNL would tender its 14.7 percent stake in TNT to the FedEx offer.
“We believe that this strategic acquisition will add significant value for FedEx share owners, 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,” Frederick W. Smith, chairman and CEO of FedEx Corp, said.
TNT Express said the deal would provide customers with bigger and better options for shipping parcels.
“This offer comes at a time of important transformations within TNT Express and we were fully geared to executing our stand-alone strategy..” Tex Gunning, CEO of TNT Express, said.
aodhiambo@ke,nationmedia.com
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