FedEx acquires TNT Express in $5 billion deal

FedEx Corporation, an American global courier delivery Services Company headquartered in Memphis, Tennessee, has acquired TNT Express. The acquisition of Dutch parcel company TNT Express NV, was unconditionally approved by European Union regulators ending a six-month antitrust investigation that had been one of the biggest hurdles toward the near-$5 billion deal.

The merger would allow FedEx to acquire an extensive ground network in Europe and Nigeria, making it a bigger player in the burgeoning e-commerce market.

According to FedEx, expanding in Europe and other overseas market including Nigeria is just one aspect of its strategy to grow revenue and profit. FedEx aimed to gain market share in the European market, especially in Europe’s fast-growing e-commerce market.

On similar terms, Red Star Express, a licensee of FedEx in Nigeria stands to gain from this merger as it will open up cost synergy opportunities.

According to market watchers, this deal poses a formidable challenge to other players in the market. They stressed that FedEx’s unmatched global air network and TNT’s road network in Europe could make this new entity the forerunner in the market.

The Merger is the third-largest company in Europe’s international express-delivery market behind DHL and UPS, and would “provide significant value to the employees, customers and shareholders of both companies, and even here in Nigeria”, an analyst said.

Red Star Express Plc., is a premium logistics solution provider in Nigeria in area of revenue, network coverage and market share in the domestic and international market. It enjoys a domestic strength of 169 offices in Nigeria, delivers to additional 1,500 communities, over 1400 highly trained personnel and over 500 vehicle fleet.

It operates as the Nigerian licensee of FedEx, which is the world’s largest express transportation company, providing fast and reliable delivery to more than 220 countries and territories around the world.”

On an analyst call last December, FedEx Chief Executive, Fred Smith, said TNT would be a welcome addition to the company’s portfolio amid a global economic slowdown. “Despite contraction of U.S. exports due to the high U.S. dollar and low world (economic) and trade growth, the overall market for international door-to-door express continues to increase, also driven by e-commerce,” he added.

Until now, FedEx has largely focused on international delivery services in Europe, with limited shipping options between countries. The new status will allow the company to become a player in ground delivery to better compete with the others for a bigger share of e-commerce shipments.

EU antitrust chief Margrethe Vestager said her agency had “thoroughly assessed the markets affected” by the deal due to the importance of affordable package delivery for many businesses and consumers, particularly in the burgeoning e-commerce market. “The conclusion is that European consumers will not be adversely affected by the transaction,” Ms. Vestager said.