×

Fred Smith: Planets aligned for FedEx-TNT deal

A favorable dollar exchange rate against the euro, an ongoing stimulus program in Europe and low oil prices converged to make multibillion-dollar deal between FedEx Corp. and Dutch rival TNT Express possible, Fred Smith said on Tuesday.

"We thought that the planets lined up perfectly for this move," the FedEx CEO and chairman said on CNBC's "Squawk on the Street."

FedEx announced on Tuesday that it had agreed to take over TNT Express, one of Europe's largest delivery companies, for 4.4 billion euros ($4.8 billion) in a move that FedEx said would strengthen its business globally.

Read More Fed needs Europe's permission to raise rates: Analyst

FedEx has reached a conditional agreement with TNT Express' management on an all-cash offer of eight euros ($8.75) for each TNT Express share. That represents a premium of 33 percent over the share's April 2 closing price, the companies said.

The companies said the deal is expected to close in the first half of 2016, pending shareholder approval. Dutch postal company PostNL, which owns a 14.7 percent stake in TNT Express, said it supports the bid.

The deal reflects FedEx's view that the world economy is in a better place today than it was six months ago, Smith told CNBC.

"You're going to see the benefits of lower oil prices throughout the global economy. It takes a little while for that to result in increased purchasing activities both in the United States and Europe," he said.

Read More Buffett's Berkshire just bought a big stake in this

The planned takeover comes two years after UPS dropped a 5.2 billion-euro (almost $7 billion) takeover bid for TNT Express, citing objections by European Union regulators.

Smith reiterated TNT Express and FedEx's view that any antitrust concerns can be addressed, saying market share numbers support approval.

The majority of synergies that arise from a deal would come from combining networks to create more productive operations, rather than from job cuts, another aspect of the deal that should appease regulators, he said.

"I don't think there's any question over the long haul the combination of FedEx and TNT will increase our employment in Europe, and we see very few redundancies in the near term that are required to make this a successful transaction," he said.

Read MoreRussia rules out joining the QE gang

Don Broughton, managing director at Avondale Partners, told CNBC's "Squawk Box" he believed a deal would be successful on the basis that FedEx's presence in Europe is not as deep or broad as UPS'.

He continued to say that FedEx has a proven track record of acquiring and improving ailing companies, adding that TNT is definitely a fixer-upper.

"Many people have talked about TNT itself not being that—no pun intended here—explosive of a company," he said. "Profit has been anything but good. It's been lackluster, losing money in many quarters. The revenue growth hasn't been there. But when FedEx takes over it could be a dynamite deal for them."

The Associated Press contributed to this article.