Tag: International

Shares in TNT NV jumped almost 30 per cent on Monday 14th July after a report that FedEx Corp. is in preliminary talks to acquire it, raising the prospect of a bidding war for the Dutch mail company.

The Financial Times newspaper reported on Saturday that FedEx Corp. wanted to add to its European parcel delivery service and that both United Parcel Service and FedEx have “coveted” TNT’s European parcel business.

TNT and FedEx declined to comment on the report.

“Such a move would make a lot of strategic sense for FedEx, given its predominantly US-business gearing and the weakness in the US Express market,” said ING analyst Axel Funhoff in a note.

“Should FedEx make a formal bid for TNT – there could be a quick counter bid from UPS, who should be equally interested in TNT but which has deeper pockets.”

TNT shares were up 26 per cent at EUR 23.26 by 0946 GMT, making it the main gainer in the DJ Stoxx industrial goods and services index, which was up 2 per cent.

The smallest of the world’s top four express delivery companies has often been seen as a target for its bigger peers and some analysts say this could be the opportunity for them to pounce.

TNT shares had shed about a third of their value since the start of the year due to uncertainty over its German business, slowing economic growth and rising oil prices.

Europe’s second-biggest mail and Logistics Company by market value, which competes with Deutsche Post, is not active in the domestic U.S. market. It has a strong presence in Europe and is expanding in Asia and South America.

Rumour that FedEX Corp could buy out Dutch-owned TNT, reported in the Financial Times, has been dismissed as speculation by TNT.

Although the idea isn’t a new one, the potential for a complete or partial buyout could be greater than ever as TNT, like many postal operators across Europe, feels the pinch of higher operating costs coupled with economic slow-down. It could be an attractive proposition for FedEX as the acquisition would strengthen FedEX’s presence in Europe.

For FedEX too, these are also difficult times, with the U.S. in the midst of a recession, but merging the two companies would enable both to ride out the present economic decline and put added pressure on Germany’s Deutsche Post. FedEX has already announced its first quarterly loss in over a decade.

If there is any basis to the rumour, it could increase FedEx’s European parcel-delivery sales by as much as 144 percent and cause other European operators to look again at further mergers.

However, TNT posted a message on its website which read:

“With reference to various news articles today in which TNT was mentioned, TNT wishes to reiterate its policy not to comment on such speculation and market rumours.”