FedEx offers to buy TNT Express for $4.8B

TNT deal brings competition to EU market: FedEx Europe President
TNT deal brings competition to EU market: FedEx Europe President   

U.S. courier delivery company FedEx on Tuesday highlighted its intentions to expand globally by announcing a planned purchase of Dutch-based rival TNT Express.

The deal is an all-cash public offer that values the European company at $4.8 billion and conditionally means that shares of TNT Express would be offered at 8 euros ($8.68) each. The offer is being priced at a 33 percent premium compared to its current value, according to a joint press release, with both firms anticipating that the deal would close in the first half of 2016.

It would also mean the combined European headquarters of the two firms would be in Amsterdam and FedEx stated in the press release that new debt arrangements would help fund the agreement. Shares of TNT Express popped 30 percent at the open on Tuesday.

The tie-up would "transform" its European capabilities and accelerate global growth and allow its customers to enjoy access to an enhanced global network.

Special delivery for FedEx
Special delivery for FedEx   

"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," chairman and chief executive of FedEx, Frederick Smith, said in the release Tuesday.

Existing employment terms of TNT Express would be respected and the Dutch firm's airline operations would be divested, it also stated.

In early 2013, antitrust regulators from the European Union blocked a bid by UPS for TNT Express, expressing concerns that the deal wasn't ensuring enough concession to make sure consumers wouldn't lose out.

On Tuesday, FedEx and TNT Express said they were confident that antitrust concerns, if any, could be addressed adequately in a timely fashion.

FedEx Europe President David Binks told CNBC on Tuesday that he thought regulators would find it "good for the market," with the tie-up creating a strong third competitor in the region. He also said that TNT was a very complementary and cultural fit for his firm.

Michael Browne, a fund manager at Martin Currie, believed the deal marked TNT Express being put out of its "misery at long, long, long last."

"The margins of this business are awful," he told CNBC on Tuesday. "There are going to be one or two delivery companies in each country because it's an incredibly asset heavy, high cost, very low margin business."

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