FedEx Corp. Tuesday announced it will buy European package company TNT Express for $4.8 billion, creating a strong third competitor in the European market.
The two companies reached an agreement on the 8-euro-per-share offer, which they say represents a premium of 33% over the closing price of April 2.
TNT gives FedEx access to pan-European service and the domestic UK and French markets, areas where it is not a big player. Meanwhile, TNT customers will get access to FedEx's global distribution platform.
Currently United Parcel Service and Deutsche Post are the big two package companies in Europe, with TNT in third place and FedEx in fourth. The deal could even allow FedEx to leapfrog to second place, reports Reuters.
David Bronczek, CEO of FedEx Express, called it "a historic day" in a press conference from Amsterdam Tuesday morning, noting that the two companies are very complementary.
One of the key benefits for FedEx, he said, is TNT's "exceptional European road platform."
"Fedex has always recognized the need for a strong pan-European road network," he said. "This achieves that more quickly and cost effectively than we could have on our own."
A the same time, he said, FedEx has strength in North America, Asia and other regions that will open up more opportunities for TNT customers wishing to reach those areas.
Meanwhile, TNT, which currently has only 54 planes in its fleet (which it will have to divest according to airline ownership rules), will gain the benefit of FedEx's 660-plane fleet.
In addition, Bronczek emphasized that the two companies are a good cultural fit.
TNT is based in the Netherlands, and the European regional headquarters of the combined companies will be in Amsterdam.
Unlike the UPS-TNT deal that was scotched by regulators two years ago, the companies say they are confident this simpler, less redundant transaction will go through as planned. The transaction was unanimously recommended and supported by TNT Express’ Executive Board and Supervisory Board. It's estimated to be completed in the first half of 2016.