If the deal succeeds, TNT Express’ European airline operations will be divested due to airline ownership regulations. “Where permitted by regulation, FedEx intends to transition TNT Express’ intercontinental air operations to FedEx,” Memphis-based FedEx said.
The offer will run from Aug. 24 until Oct. 30 and needs to achieve 95% acceptance from TNT Express’ shareholders, although this could be lowered to 80% during a TNT Express extraordinary general meeting on Oct. 5. TNT Express’ management, its works councils and 14.7% shareholder PostNL are all supporting the acquisition.
“We believe the combination will provide significant value to both companies and both sets of shareholders. FedEx is delighted by the unanimous support from the [TNT Express] executive board and the supervisory board,” FedEx Express regional president Europe David Binks said.
After settlement, Binks will become TNT Express CEO, replacing Tex Gunning who will resign as head of the company but will assist with the integration for a further six months. TNT Express CFO Maarten de Vries will continue in his position for six months and FedEx Express SVP legal international Mark Allen will join the board.
FedEx will also appoint three executives—David Cunningham, Christine Richards and David Bronczek–to the TNT Express supervisory board, which will be chaired by Bronczek.
An integration committee will be created to oversee the acquisition, made up of two executives from each company. This committee will be maintained for at least two years, chaired by a FedEx executive with a casting vote.
“The integration committee will determine an integration plan and submit it to FedEx and the boards, monitor its implementation and do all things necessary to assist and optimize the integration of the combination.
The initial members of the integration committee will be Mr. Gunning, Mr. De Vries, Mr. Cunningham and Robert Henning. Mr. Gunning and Mr. De Vries have agreed to serve on the integration committee for a period of six months after the settlement date. When either Mr. Gunning or Mr. De Vries resigns from the integration committee, his seat will be taken up by another executive of TNT Express,” FedEx said.
FedEx has committed to “avoid any significant redundancies,” use Amsterdam/Hoofddorp as its European regional headquarters and maintain Liege as a “significant operation” for the group. “The brand name of TNT Express will be maintained for an appropriate period,” it added.
To complete the deal, FedEx needs competition clearance from the EU, Brazil, China and the US. The freight giant said it is “on track” with these approvals, despite the European Commission having opened an in-depth investigation into the deal earlier this month. This probe was scheduled for completion by Dec. 7, but this has now been extended to Jan. 13, 2016.
A previous tie-up between TNT Express and US-based United Parcel Service (UPS) fell down on competition clearances. There are currently only four “integrators” operating in the European Economic Area (EEA), including FedEx and TNT. The other two are DHL, which is owned by Deutsche Post, and UPS.
FedEx argues that the tie-up will create “a highly pro-competitive proposition” for the small package market, as FedEx is strong within the US and to Europe, while TNT Express’ has an intra-European focus. “The combination's customers would enjoy access to a considerably enhanced, integrated global network,” it said.
(Victoria Moores - ATWOnline News)