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FedEx Buys TNT Express for $4.8B


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FedEx Corporation is looking to boost its business overseas. To expand into the European market, FedEx recently bought the Netherlands-based courier delivery company TNT Express for USD$4.8 billion in an all-cash deal that was announced in April 2015.

The deal comes just two years after rival UPS attempted to acquire TNT Express for $7 billion back in January of 2013. That deal was nixed by European Union regulators, who still have to approve the current deal with FedEx before it becomes official.

One of the main differences between this merger and the failed one with UPS – who already had a strong, established European network – is FedEx’s lack of European presence. While FedEx maintains a large fleet of air-express delivery aircraft, it is considerably behind UPS and DHL in ground-delivery in the European market.

For example, UPS and FedEx had reported revenues of $58 billion and $46 billion, respectively last year. However, UPS had a 25% market share in Europe, while FedEx was only at 10% (even smaller than TNT’s 12%).

“This deal is much better and simpler,” said TNT Express CEO Tex Gunning at an Amsterdam news conference, comparing it to the previous one with UPS. “There is little overlap; our businesses are complementary.”

TNT Express has an established door-to-door ground network that spans over forty countries. By acquiring this rival, FedEx saves itself the time and money it would take to start up their own network from nothing.

“The combination of FedEx’s existing network and TNT’s broad ground-based network will offer tremendous opportunities for us as a result of enhanced coverage, a broader portfolio, obviously, better pickup and delivery cost; and, obviously we’re very excited about those opportunities,” said T. Michael Glenn, FedEx’s executive vice president of market development.

The acquisition would bring FedEx about 58,000 new employees, 19 additional road hubs, and 550 new depots. UPS declined to comment on the move.

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