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13th Jul 2008, 20:30
FT.com / Companies / Transport - FedEx in talks to buy Dutch rival TNT (http://www.ft.com/cms/s/0/6516dcba-4f7d-11dd-b050-000077b07658.html?nclick_check=1)
FedEx in talks to buy Dutch rival TNT
By Lina Saigol in London and Justin Baer in New York
Published: July 11 2008 23:31 | Last updated: July 11 2008 23:31
FedEx is in preliminary talks to acquire TNT (http://markets.ft.com/tearsheets/performance.asp?s=nl:TNT), its smaller Dutch rival, in a deal that would bolster the package-delivery company’s parcel network throughout Europe.
A deepening economic downturn and mounting fuel costs have hurt demand for package deliveries, reviving merger discussions that have continued in starts and stops for years.
While FedEx and arch-rival United Parcel Service have coveted TNT’s European parcel business, they have been reluctant to take on the Dutch company’s slower-growing postal division.
On Friday, FedEx’s market capitalisation was $22.8bn (€14.3bn), while TNT’s market capitalisation was $11.3bn.
Deutsche Post’s £3.7bn to acquire Exel, the UK-based logistics group, in 2005 has so far been the biggest deal in the sector. Other transactions have included the $1.1bn merger of Deutsche Bahn, the German rail operator, and Bax Global, the logistics arm of US-based Brink’s and the €490m acquisition of Paris-based ACR Logistics by Kuhne & Nagel of Switzerland.
DHL, TNT and FedEx together account for about 60 per cent of the European express logistics market in value terms.
TNT, which primarily operates in Europe and North America, divides its business into two segments: express and mail.
FedEx runs the world’s largest express-delivery company. The group mainly operates in the US, but in recent years has begun to expand its international operations.
However, the US company in June posted its first quarterly loss in 11 years and projected earnings that fall short of analysts’ estimates because of fuel costs and declining demand.
FedEx reported a fourth quarter loss of $241m on a writedown for its Kinko’s unit and predicted a “very difficult” environment in the coming year.
Economists have cut their US growth forecasts for later this year and next as job losses, food and fuel prices and tougher lending rules hurt consumers.
“As a matter of policy, FedEx does not comment on rumours or speculation about corporate development activities,” a company spokesman said.
FedEx has sought to build out its Continental network as well as aiming to establish a presence in individual European countries. The company bought ANC in 2006 to strengthen its domestic express-delivery business in the UK.
Bloomberg.com: Worldwide (http://www.bloomberg.com/apps/news?pid=20601087&sid=aJMflfrASFLc&refer=home)
FedEx May Buy Dutch TNT to Add Europe Parcel Delivery, FT Says
By Jeroen Molenaar and Sarah Thompson
July 12 (Bloomberg) -- FedEx Corp., the second-largest U.S. package-shipping company, is in preliminary talks to take over TNT NV, the Financial Times (http://www.ft.com/cms/s/0/6516dcba-4f7d-11dd-b050-000077b07658.html) reported. Buying the Dutch operator would make FedEx the No. 2 express-delivery service in Europe.
Rising fuel costs and an economic decline revived merger discussion between FedEx and TNT, the U.K. newspaper said today, without citing anyone. Pieter Schaffels (http://search.bloomberg.com/search?q=Pieter+Schaffels&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), a spokesman for TNT, and Jess Bunn (http://search.bloomberg.com/search?q=Jess+Bunn&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) of FedEx both declined to comment when contacted by telephone and e-mail today.
A buyout ``makes sense,'' said Philip Scholte (http://search.bloomberg.com/search?q=Philip+Scholte&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), an analyst at Rabo Securities in Amsterdam. ``You just link the two networks together.''
Memphis, Tennessee-based FedEx last month posted its first quarterly loss in 11 years and said earnings will fall, as jet fuel prices increased and the slowing U.S. economy prompted customers to seek cheaper ways of shipping goods.
An acquisition of TNT, which said in June it coped with rising fuel prices by transporting as much as possible by road, would boost FedEx's parcel-delivery sales outside the U.S. by 144 percent to $17.6 billion, more than half its total revenue.
FedEx's market capitalization was $22.9 billion at Friday's closing price of $73.94, after the stock had fallen more than 17 percent this year. TNT, valued at 7.02 billion euros ($11.2 billion), has slid almost 35 percent, to 18.51 euros.
``If TNT stock stays as low as this, it's not surprising these kind of rumors hit the market,'' said Scholte, who has a ``buy'' recommendation on the company and a share price estimate of 36 euros. He said investors probably wouldn't accept a takeover premium of 30 percent, which he called a typical offer, adding that the shares may fetch as much as 40 euros apiece.
Competition
An acquisition of TNT would increase competition with DHL Express, a unit of Deutsche Post AG, Europe's biggest mail carrier. In May Deutsche Post (http://search.bloomberg.com/search?q=May+Deutsche+Post&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) teamed up with United Parcel Service Inc., which ranks first in the U.S. package delivery business, to help restore earnings at the unprofitable DHL division.
UPS, which on June 24 reduced its second-quarter profit forecast on rising fuel costs and a cooling U.S. economy, may also be interested in buying TNT, Scholte said.
Hoofddorp-based TNT, also the Netherlands' largest mail service, sold its logistics and freight-management businesses to expand mail and parcel-delivery services in Europe, Latin America and Asia. The company, which traces its origins to the 1752 founding of the Dutch postal service, gets 2 to 3 percent of its 10.9 billion-euro ($17.3 billion) sales from the U.S. each year.
Last year, FedEx had sales of $37.95 billion, boosted by shipping goods such as music CD's and computer games from Sony Corp., the world's second-largest consumer-electronics maker, and the colorful plastic clogs with holes made by Crocs Inc..
To contact the reporters on this story: Sarah Thompson (http://search.bloomberg.com/search?q=Sarah+Thompson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in London at [email protected] ([email protected]); To contact the reporter on this story: Jeroen Molenaar (http://search.bloomberg.com/search?q=Jeroen+Molenaar&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in Amsterdam [email protected] ([email protected])
FedEx in talks to buy Dutch rival TNT
By Lina Saigol in London and Justin Baer in New York
Published: July 11 2008 23:31 | Last updated: July 11 2008 23:31
FedEx is in preliminary talks to acquire TNT (http://markets.ft.com/tearsheets/performance.asp?s=nl:TNT), its smaller Dutch rival, in a deal that would bolster the package-delivery company’s parcel network throughout Europe.
A deepening economic downturn and mounting fuel costs have hurt demand for package deliveries, reviving merger discussions that have continued in starts and stops for years.
While FedEx and arch-rival United Parcel Service have coveted TNT’s European parcel business, they have been reluctant to take on the Dutch company’s slower-growing postal division.
On Friday, FedEx’s market capitalisation was $22.8bn (€14.3bn), while TNT’s market capitalisation was $11.3bn.
Deutsche Post’s £3.7bn to acquire Exel, the UK-based logistics group, in 2005 has so far been the biggest deal in the sector. Other transactions have included the $1.1bn merger of Deutsche Bahn, the German rail operator, and Bax Global, the logistics arm of US-based Brink’s and the €490m acquisition of Paris-based ACR Logistics by Kuhne & Nagel of Switzerland.
DHL, TNT and FedEx together account for about 60 per cent of the European express logistics market in value terms.
TNT, which primarily operates in Europe and North America, divides its business into two segments: express and mail.
FedEx runs the world’s largest express-delivery company. The group mainly operates in the US, but in recent years has begun to expand its international operations.
However, the US company in June posted its first quarterly loss in 11 years and projected earnings that fall short of analysts’ estimates because of fuel costs and declining demand.
FedEx reported a fourth quarter loss of $241m on a writedown for its Kinko’s unit and predicted a “very difficult” environment in the coming year.
Economists have cut their US growth forecasts for later this year and next as job losses, food and fuel prices and tougher lending rules hurt consumers.
“As a matter of policy, FedEx does not comment on rumours or speculation about corporate development activities,” a company spokesman said.
FedEx has sought to build out its Continental network as well as aiming to establish a presence in individual European countries. The company bought ANC in 2006 to strengthen its domestic express-delivery business in the UK.
Bloomberg.com: Worldwide (http://www.bloomberg.com/apps/news?pid=20601087&sid=aJMflfrASFLc&refer=home)
FedEx May Buy Dutch TNT to Add Europe Parcel Delivery, FT Says
By Jeroen Molenaar and Sarah Thompson
July 12 (Bloomberg) -- FedEx Corp., the second-largest U.S. package-shipping company, is in preliminary talks to take over TNT NV, the Financial Times (http://www.ft.com/cms/s/0/6516dcba-4f7d-11dd-b050-000077b07658.html) reported. Buying the Dutch operator would make FedEx the No. 2 express-delivery service in Europe.
Rising fuel costs and an economic decline revived merger discussion between FedEx and TNT, the U.K. newspaper said today, without citing anyone. Pieter Schaffels (http://search.bloomberg.com/search?q=Pieter+Schaffels&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), a spokesman for TNT, and Jess Bunn (http://search.bloomberg.com/search?q=Jess+Bunn&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) of FedEx both declined to comment when contacted by telephone and e-mail today.
A buyout ``makes sense,'' said Philip Scholte (http://search.bloomberg.com/search?q=Philip+Scholte&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), an analyst at Rabo Securities in Amsterdam. ``You just link the two networks together.''
Memphis, Tennessee-based FedEx last month posted its first quarterly loss in 11 years and said earnings will fall, as jet fuel prices increased and the slowing U.S. economy prompted customers to seek cheaper ways of shipping goods.
An acquisition of TNT, which said in June it coped with rising fuel prices by transporting as much as possible by road, would boost FedEx's parcel-delivery sales outside the U.S. by 144 percent to $17.6 billion, more than half its total revenue.
FedEx's market capitalization was $22.9 billion at Friday's closing price of $73.94, after the stock had fallen more than 17 percent this year. TNT, valued at 7.02 billion euros ($11.2 billion), has slid almost 35 percent, to 18.51 euros.
``If TNT stock stays as low as this, it's not surprising these kind of rumors hit the market,'' said Scholte, who has a ``buy'' recommendation on the company and a share price estimate of 36 euros. He said investors probably wouldn't accept a takeover premium of 30 percent, which he called a typical offer, adding that the shares may fetch as much as 40 euros apiece.
Competition
An acquisition of TNT would increase competition with DHL Express, a unit of Deutsche Post AG, Europe's biggest mail carrier. In May Deutsche Post (http://search.bloomberg.com/search?q=May+Deutsche+Post&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) teamed up with United Parcel Service Inc., which ranks first in the U.S. package delivery business, to help restore earnings at the unprofitable DHL division.
UPS, which on June 24 reduced its second-quarter profit forecast on rising fuel costs and a cooling U.S. economy, may also be interested in buying TNT, Scholte said.
Hoofddorp-based TNT, also the Netherlands' largest mail service, sold its logistics and freight-management businesses to expand mail and parcel-delivery services in Europe, Latin America and Asia. The company, which traces its origins to the 1752 founding of the Dutch postal service, gets 2 to 3 percent of its 10.9 billion-euro ($17.3 billion) sales from the U.S. each year.
Last year, FedEx had sales of $37.95 billion, boosted by shipping goods such as music CD's and computer games from Sony Corp., the world's second-largest consumer-electronics maker, and the colorful plastic clogs with holes made by Crocs Inc..
To contact the reporters on this story: Sarah Thompson (http://search.bloomberg.com/search?q=Sarah+Thompson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in London at [email protected] ([email protected]); To contact the reporter on this story: Jeroen Molenaar (http://search.bloomberg.com/search?q=Jeroen+Molenaar&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in Amsterdam [email protected] ([email protected])