| The acquisition of TNT Express by FedEx makes strategic sense for FedEx to immediately grow its European capabilities, distribution footprint and marketshare. While FedEx already operates a sizeable air fleet in Europe, TNT now gives FedEx an expansive Ground network throughout the continent, especially within France and the UK where FedEx does not have a strong road network. Conversely, it's a good move for TNT to expand global capabilities to its customer base, especially in North America. With this acquisition, FedEx will immediately become the second largest operator with a combined 17% of the European market share. DHL has an estimated 19% marketshare, UPS about 16%. Unlike the failed acquisition of TNT by UPS in 2012, EU regulators are less likely to object since FedEx has less presence in Europe, less than 5% of the market share prior to today's announcement. While FedEx's all-cash offer of €4.4B represents a 33% premium over TNT's most recent closing price, it's a relatively cheap bargain from UPS's 2012 offer of nearly €7B. Moreover, it was the perfect time for FedEx to make this move given the U.S. dollar's strength over the Euro. On March 19, 2012 when UPS announced its proposed acquisition of TNT, the U.S. dollar was trading at .7142 to the Euro. Today, the U.S. dollar is trading 28.9% higher at .9211. Rob Martinez, DLP, CMDSS, is President & CEO, Shipware, LLC. Contact him at 858.879.2020 Ext 114 or rob@shipware.com. |
