Tennessee-based FedEx Corporation and Europe’s TNT Express N.V. announced on April 7 that they have reached a conditional agreement for the American express service provider to make an offer to acquire its Hoofddorp, the Netherlands counterpart.
The conditional agreement involves an all-cash offer by FedEx of EUR8 per ordinary TNT Express share, placing the value of the TNT Express purchase at EUR4.4 billion (US$4.8 billion).
The offer price represents a premium of 33% over the closing price of April 2, 2015 and a premium of 42% over the average volume weighted price per TNT Express share of EUR5.63 over the last three calendar months.
A joint statement by the two corporations said the transaction was unanimously recommended and supported by TNT Express’ executive and supervisory boards.
The two companies rationalized the merger as enabling them to emerge as “a strong global competitor in the transportation and logistics industry.”
They added that customers “will enjoy access to an enhanced, integrated global network, combining TNT Express strong European capabilities and FedEx’s strength in other regions globally, including North America and Asia.”
The two sides also agreed to some non-financial covenants including respecting the existing employment terms of TNT Express.
Moreover, the European regional headquarters of the combined companies will be in Amsterdam/Hoofddorp, the TNT Express hub in Liege will be maintained as a significant operation for the group, and TNT Express’ airline operations will be divested as required by airline ownership regulations.
FedEx and TNT Express said they anticipate that the offer will close in the first half of calendar year 2016.
They are also confident that any anti-trust concerns that may arise can be addressed adequately. FedEx and TNT Express will seek to obtain all necessary approvals and competition clearances “as soon as practicable.” The required advice and consultation procedures with TNT Express Central Works Council, European Works Council and unions will start immediately, they added.
FedEx intends to submit a request for approval of its offer to the Dutch Authority for the Financial Markets (AFM) within six weeks from April 7 and to publish the offer memorandum shortly after approval of the AFM.
Once the merger is completed, the TNT Express supervisory board will be composed of three new members selected by FedEx (David Binks, Mark Allen, and David Cunningham who will act as chairman) and of two independent members of the current supervisory board of TNT Express (Margot Scheltema and Shemaya Levy Chocron), who will continue to serve on the board for at least three years.
Gunning and CFO Maarten De Vries will remain on the executive board of TNT.
The statement indicated a “high level” of certainty that the deal will be completed.
However, if the merger proceedings are terminated by FedEx due to a breach by TNT Express or a superior offer by a third party, TNT Express will forfeit a gross EUR45-million termination fee to FedEx.
On the other hand, if the merger agreement is terminated by TNT Express due to a breach by FedEx, the competition clearance not having been obtained, or FedEx failing to start or pursue the offer, FedEx will forfeit a gross EUR200-million reverse termination fee to TNT Express.
