TNT Shareholders Approve Terms of $4.9 Billion Acquisition by FedEx
Shareholders of TNT N.V., the Europe-based carrier that agreed to a $4.9 billion acquisition by FedEx Corp., have backed the terms of the deal, which FedEx said would increase package and freight competition.
The announcement by Memphis, Tennessee-based FedEx, which ranks No. 2 on the Transport Topics Top 100 listing of the largest for-hire carriers in the United States and Canada, noted that TNT shareholders approved a provision to close the deal if 80% of shares were tendered. A tender offer is scheduled to end Oct. 30.
Separately, TNT said its third-quarter results worsened. The Hoofddorp, Netherlands-based company’s adjusted operating income was “materially lower” than the same period last year. That figure, excluding interest, taxes and one-time charges, was 50 million euros (about $55 million) in the 2014 period.
“We appreciate that the shareholders of TNT Express approved the resolutions of TNT Express’ Extraordinary General Meeting,” said David Binks, FedEx Express regional president Europe. “We believe the combination of these two great companies will provide significant value to the employees, customers and share owners of both TNT Express and FedEx. We continue to work constructively with the regulatory authorities around the world to obtain clearance of the acquisition.”
FedEx has said it intends to complete the acquisition next year. In April, FedEx offered 8 euros per share for TNT. Last week, shares were trading about 20% below the offer price, after the seller’s profit warning.
“The combination presents a highly pro-competitive proposition for the provision of small-package delivery services within and outside Europe,” according to the company’s statement.
While the tender offer proceeds, the European Commission is weighing the competitive aspects of the deal against the backdrop of its 2013 move to block UPS Inc.’s attempt to buy TNT. A decision is expected from the commission by Jan. 13.
Bloomberg News reported that UPS is lobbying against FedEx’s bid, without identifying its sources.
“UPS expects that European regulators will utilize the same stringent process for evaluating the proposed FedEx-TNT transaction as was utilized when UPS proposed to acquire TNT,” UPS spokesman Steve Gaut told TT. “UPS is responding to inquiries from competition authorities in several countries in line with their investigations of the transaction.”
“Maybe the European Commission feels a little bit in a straitjacket because it’s defending its analysis in the other case,” Marc Israel, a British competition lawyer, told Bloomberg. “They’ll probably try to navigate between the precedent they’ve set” and the court case that is pending, Israel said.
FedEx last week noted that Chinese and Brazilian regulators as well as the EC have to approve the plan, which could affect the time period for accepting shares.
FedEx previously has said that combining the two companies would strengthen competition in Europe’s package-delivery markets. FedEx now has the smallest market share among competitors that include market leader DHL, UPS and TNT.
It also has pledged to divest TNT Airways, which has 50 planes, and use its own fleet to move TNT shipments.
TNT attributed the third-quarter earnings weakness to conditions in Brazil, China, Australia and France. During the first two quarters of 2015, its adjusted operating income fell 63% to 42 million euros.
