The €8-a-share bid is at a 33 per cent premium to TNT Express’s closing share price last Thursday but considerably below the €9.50 that rival UPS offered in 2013 when its bid was set to be blocked by European regulators.
TNT Express is one of the largest parcel and freighting companies in the UK, with 8,000 employees and 3,500 vehicles operating from 70 locations and handling 150 million packages a year.
It is a direct rival to Royal Mail’s Parcelforce but no longer owns the local mail delivery business TNT Post, which was recently rebranded as Whistl and competes directly with Royal Mail.
However, Whistl owner TNT Post, which split from TNT Express following the failed UPS bid, will be a big beneficiary from yesterday’s bid. It still owns 14.7 per cent of TNT Express and has agreed to sell its stake to FedEx for €642m.
FedEx, which employs 160,000 people worldwide but has much smaller operations in the UK, has made no secret of its ambitions to expand in Europe under chief executive Fred Smith, who wants to increase its profits significantly.
He said: “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.”
TNT Express has sold off assets to boost its balance sheet since the failed UPS bid but has reported four consecutive years of losses.
It faces a tough 2015, with increased competition weighing on delivery prices. TNT warned in February that it expected adverse trading conditions to continue in its main west European markets.
The company recorded a €53m operating loss for the final quarter of 2014, compared with a €79m profit in the same period in 2013.
Its chief executive, Tex Gunning, said: “This offer comes at a time of important transformations within TNT Express and we were fully geared to executing our stand-alone strategy. But while we did not solicit an acquisition, we truly believe that FedEx’s proposal, both from a financial and a non-financial view, is good news for all stakeholders.”
Industry sources said FedEx was likely to face fewer competition problems than with the previous bid from UPS. TNT said it would sell its cargo airline to address competition concerns.
The terms of the takeover allow for a competitor to make an offer within the next eight weeks and for the current deal to be terminated if that offer exceeds the existing proposal by 8 per cent. FedEx has been advised by JPMorgan, and TNT Express by Goldman Sachs and Lazard.