Will FedEx gun for No. 4 TNT?
As shares of the world’s fourth-largest package carrier fizzled Thursday, Wall Street matchmakers couldn’t resist thinking FedEx Corp. would be the perfect suitor.
Dutch transportation company TNT NV, a composite of three entities – the Dutch postal service, express delivery and logistics – lost more than 5 percent of its stockholder value Thursday, a day after a private German investor said he was putting together a group, including an unnamed strategic investor in the logistics field, to buy it.
When nothing materialized, investors began jumping ship.
Analysts say it’s very possible FedEx is the strategic investor, interested in buying the express delivery or logistics division, or both.
“It would give FedEx a strong presence within Europe and the ability to offer comprehensive logistics and supply chain solutions,” said Jon Langenfeld, analyst at Robert W. Baird & Co.
While UPS has also been touted as a possible suitor, the move makes more sense for FedEx because UPS already has a strong presence in Europe and a logistics platform for nonpackage solutions.
FedEx would not comment.
Analysts put TNT’s market cap at more than $12 billion. FedEx’s market cap is $28.8 billion.
Its biggest revenue producer is TNT Express, which delivers documents, parcels and freight mostly within Europe, although it is planning to expand in China.
In North America, TNT uses commercial aircraft to transport international packages.
“For years, people have speculated FedEx would buy the parcel business,” said Morgan Keegan analyst Art Hatfield. “It would really give them a presence in Europe and make them competitive over there.”
With its two brands, TNT and Royal TPG Post, TNT is fourth behind UPS, Deustche Post and FedEx on the world market. The company employs 161,000 people in 63 countries.
But without the resources of German-owned postal service Deustche Post, TNT is up against tough competition, Hatfield said.
“It costs too much to catch up.”
FedEx does business in 220 countries and territories and employs 250,000 people worldwide.
If it’s been slow to evolve in Europe, Hatfield says it’s because FedEx “had opportunities to invest in other areas that have been successful.
“I think they’ve wanted to be involved in Europe and saw the best way to do it was through acquisition. Sometimes it takes longer to get a buy.”
Most agree that if TNT helps FedEx strategically, the deal could be done before the year’s over.
“Fred Smith is not bashful about making acquisitions,” said A.G. Edwards analyst Donald Broughton. “There’s Kinko’s, American Freightways, Caliber and Flying Tigers.
“But in this case, anyone who knows anything cannot talk, by law. The only people commenting are those who don’t know.”
-Jane Roberts: 529-2512
