FedEx to Start Tender Offer for TNT Shares
FedEx Corp. and TNT N.V. said the U.S. company would begin a tender offer for the Dutch package and freight carrier’s shares on Aug. 24 to advance their planned $4.8 billion merger.
The plan calls for FedEx, which intends to expand its global capability through the acquisition, to spend 8 euros (about $9) per share for TNT was announced on April 7. The announcement on Aug. 21 said the offer, which will end on Oct. 30, was being made and disclosed in accordance with Dutch law.
The European Commission is reviewing competitive ramifications of the proposal, which could vault FedEx into a virtual tie with UPS Inc. as the largest U.S.-based freight companies by revenue, each with nearly $60 billion in annual sales.
Two years ago, the EC rejected UPS’ bid for TNT, citing a reduction in competition. FedEx maintains that its offer for TNT, which announced an Oct. 5 shareholder meeting to discuss the plan, is pro-competitive.
“The process of obtaining all necessary approvals and competition clearances is on track and evolving in line with the previously communicated timetable,” the statement said. The EC has scheduled a decision by Jan. 13.
After completion, the combined market share of FedEx and TNT’s package business in Europe would be similar to rival package carriers UPS and DHL, based on an industry analysis.
“We believe the combination will provide significant value to both companies and both sets of shareholders. FedEx is delighted by the unanimous support from the Executive Board and the Supervisory Board,” said David Binks, regional president Europe, FedEx Express.
The Dutch post office, which spun off TNT in 2011, has agreed to tender its 15% of the carrier’s stock.
The statement disclosed that after the purchase, TNT’s supervisory board would have three members named by FedEx and two holdovers from TNT.
Its executive board would include Binks, as CEO, and Maarten de Vries will remain as CFO for six months after the closing, expected in the first half of 2016. Tex Gunning, current CEO of TNT, will leave his post when the acquisition is complete, the companies announced.
The companies also announced the formation of an integration committee to oversee the post-transaction combination of assets and outlined severance benefits for the TNT executives.
FedEx has said it has the capability to finance the transaction and has said it will respect existing union rights and benefits of TNT workers.
FedEx also has said it will sell TNT Airways, which has 50 planes to help win approval of the transactions. FedEx, which has about 650 aircraft, will absorb TNT shipments into its network.
Chinese and Brazilian regulators also must approve the plan for it to go forward.
In a separate development, the U.S. Court of Appeals in St. Louis ruled that a trial judge improperly found that FedEx Ground drivers were employees in a case involving a bid by workers to change their status as independent contractors. Instead, the Appeals Court said a jury should have decided worker status.
Drivers throughout the country have filed claims against the company, which have been consolidated in a federal case in Indiana. Laws of each state, however, determine the employee- contractor issue, the appellate court said.
The ruling gives the company a chance to defend anew what had been a core component of its business model. The company has said it has won at least 100 worker status cases in defending the independent contractor status. Recent court rulings in California and Kansas have favored classification of Ground workers in those states as employees.
