TNT Deal Progresses
10-09-2015, 02:55 PM
#1
Gets Weekends Off
Thread Starter
Joined APC: Aug 2012
Posts: 711
TNT Deal Progresses
We know the European Commission is looking at the deal, but progress continues.
TNT Express passes takeover resolutions; warns on 3Q
Victoria Moores
Oct 09, 2015
TNT Express shareholders have passed a series of resolutions during an extraordinary general meeting, paving the way for FedEx to acquire the company.
However, in a trading update released just ahead of the meeting, TNT cautioned its third quarter adjusted operating income will be “materially” lower than in the same period of last year.
TNT said it has made progress with the roll-out of its three- to five-year “Outlook” turnaround strategy, posting underlying revenue growth, but economic volatility in Brazil, China and Australia weighed on its performance. It also faced headwinds in the Australian domestic market and its French operations posted “substantially lower margins.” Transition costs and a €300 million (€338 million) investment in transport and IT infrastructure in 2015, but not due for completion until 2016, also had an impact.
“In view of these factors as well as Outlook-related transition costs, TNT anticipates that third-quarter adjusted operating income will be materially lower than in the same period of last year. As stated in February, 2015 is a challenging year of transition for TNT, which expects to “achieve year-over-year improvements from 2016 onward and to realize the full benefits of Outlook from 2018-2019,” it said.
During the EGM, TNT’s shareholders accepted all the resolutions related to the €4.4 billion Fedex takeover, including the appointment of three FedEx executives—David Cunningham, Christine Richards and David Bronczek—to the TNT Express supervisory board once the deal is finalized.
Shareholders have until Oct. 30 to tender their shares under the €8.00 per share takeover bid; FedEx is aiming to complete the acquisition in the first half of 2016. If the deal succeeds, TNT Express’ European airline operations will be divested due to airline ownership regulations.
TNT is due to detail its third quarter performance on Oct. 26.
TNT Express passes takeover resolutions; warns on 3Q
Victoria Moores
Oct 09, 2015
TNT Express shareholders have passed a series of resolutions during an extraordinary general meeting, paving the way for FedEx to acquire the company.
However, in a trading update released just ahead of the meeting, TNT cautioned its third quarter adjusted operating income will be “materially” lower than in the same period of last year.
TNT said it has made progress with the roll-out of its three- to five-year “Outlook” turnaround strategy, posting underlying revenue growth, but economic volatility in Brazil, China and Australia weighed on its performance. It also faced headwinds in the Australian domestic market and its French operations posted “substantially lower margins.” Transition costs and a €300 million (€338 million) investment in transport and IT infrastructure in 2015, but not due for completion until 2016, also had an impact.
“In view of these factors as well as Outlook-related transition costs, TNT anticipates that third-quarter adjusted operating income will be materially lower than in the same period of last year. As stated in February, 2015 is a challenging year of transition for TNT, which expects to “achieve year-over-year improvements from 2016 onward and to realize the full benefits of Outlook from 2018-2019,” it said.
During the EGM, TNT’s shareholders accepted all the resolutions related to the €4.4 billion Fedex takeover, including the appointment of three FedEx executives—David Cunningham, Christine Richards and David Bronczek—to the TNT Express supervisory board once the deal is finalized.
Shareholders have until Oct. 30 to tender their shares under the €8.00 per share takeover bid; FedEx is aiming to complete the acquisition in the first half of 2016. If the deal succeeds, TNT Express’ European airline operations will be divested due to airline ownership regulations.
TNT is due to detail its third quarter performance on Oct. 26.
10-11-2015, 03:40 AM
#2
Gets Weekends Off
Joined APC: Jul 2007
Position: Gear Monkey
Posts: 3,200
FedEx's Big Merger Plans Take a Step Forward -- But One Key Barrier Remains
TNT shareholders have approved FedEx's acquisition offer, but regulators could still derail this planned merger.
Earlier this year, FedEx (NYSE:FDX) announced plans to merge with Dutch package delivery rival TNT Express in order to expand its presence in Europe.
Whereas FedEx has a big presence in the U.S., East Asia, and global air cargo, TNT has a strong road network in Europe, something that FedEx has been missing.
Earlier this week, FedEx moved a step closer to closing the transaction as TNT shareholders voted to approve several resolutions that clear the path for the merger.
However, the two companies still face one big hurdle -- they need to convince EU regulators that the merger will promote competition.
An important vote passes
In the tender offer FedEx submitted to acquire TNT, one key term was that at least 95% of TNT's shareholder base would have to accept the offer for the merger to go through.
However, that threshold would be lowered to 80% if TNT's shareholder body approved several resolutions at a special meeting.
This meeting was held last Monday.
Since TNT's shareholders approved all of the resolutions in favor of the merger, the deal can go through even if only 80% of the company's shares are tendered.
That's a much easier hurdle, increasing the likelihood that the merger plan will garner the necessary support.
Will regulators approve?
FedEx and TNT have publicly claimed that the merger is clearly pro-competitive and therefore will not hit any regulatory snags.
They reason that DHL and United Parcel Service have vastly higher shares of the European express delivery market, estimated at 41% and 25%, respectively by DHL (via The Wall Street Journal).
By contrast, FedEx and TNT combined have only 22% market share.
Nevertheless, European regulators are seriously considering demanding concessions from FedEx as a condition of allowing the merger. While FedEx and TNT have touted the benefits of having three strong competitors rather than two strong ones and two weaker ones, the EU regulators may not agree with that logic.
If the EU demands significant asset sales, that could become an obstacle to completing the merger.
The key problem is that there aren't any other major competitors in the market that could buy whatever assets FedEx and TNT might be obliged to sell.
This merger is important to FedEx's long-term strategy
FedEx would probably be willing to make some concessions in order to keep the TNT deal on track because of the merger's strategic value.
Combining TNT's road network with FedEx's global air shipping prowess could allow the merged company to win much more business in Europe.
It will probably take a while for those benefits to materialize, though.
TNT recently issued a profit warning for the third quarter and it is very much a turnaround story.
A TNT-FedEx merger could allow the combined company to better tap into rising European export volumes, but FedEx will need sustained demand growth to earn a good return on the purchase price.
In addition to the cost of acquiring TNT, FedEx may also need to invest a significant amount of capital to make up for deferred investment at financially troubled TNT.
That adds to the expense of the deal.
Considering all of these factors, it's clear that FedEx wants to go through with the TNT merger in order to bolster its position in Europe.
That said, it could take years for the merger to start making a meaningful contribution to FedEx's earnings.
As a result, if EU regulators demand big concessions, that could be enough to make FedEx walk away.
TNT shareholders have approved FedEx's acquisition offer, but regulators could still derail this planned merger.
Earlier this year, FedEx (NYSE:FDX) announced plans to merge with Dutch package delivery rival TNT Express in order to expand its presence in Europe.
Whereas FedEx has a big presence in the U.S., East Asia, and global air cargo, TNT has a strong road network in Europe, something that FedEx has been missing.
Earlier this week, FedEx moved a step closer to closing the transaction as TNT shareholders voted to approve several resolutions that clear the path for the merger.
However, the two companies still face one big hurdle -- they need to convince EU regulators that the merger will promote competition.
An important vote passes
In the tender offer FedEx submitted to acquire TNT, one key term was that at least 95% of TNT's shareholder base would have to accept the offer for the merger to go through.
However, that threshold would be lowered to 80% if TNT's shareholder body approved several resolutions at a special meeting.
This meeting was held last Monday.
Since TNT's shareholders approved all of the resolutions in favor of the merger, the deal can go through even if only 80% of the company's shares are tendered.
That's a much easier hurdle, increasing the likelihood that the merger plan will garner the necessary support.
Will regulators approve?
FedEx and TNT have publicly claimed that the merger is clearly pro-competitive and therefore will not hit any regulatory snags.
They reason that DHL and United Parcel Service have vastly higher shares of the European express delivery market, estimated at 41% and 25%, respectively by DHL (via The Wall Street Journal).
By contrast, FedEx and TNT combined have only 22% market share.
Nevertheless, European regulators are seriously considering demanding concessions from FedEx as a condition of allowing the merger. While FedEx and TNT have touted the benefits of having three strong competitors rather than two strong ones and two weaker ones, the EU regulators may not agree with that logic.
If the EU demands significant asset sales, that could become an obstacle to completing the merger.
The key problem is that there aren't any other major competitors in the market that could buy whatever assets FedEx and TNT might be obliged to sell.
This merger is important to FedEx's long-term strategy
FedEx would probably be willing to make some concessions in order to keep the TNT deal on track because of the merger's strategic value.
Combining TNT's road network with FedEx's global air shipping prowess could allow the merged company to win much more business in Europe.
It will probably take a while for those benefits to materialize, though.
TNT recently issued a profit warning for the third quarter and it is very much a turnaround story.
A TNT-FedEx merger could allow the combined company to better tap into rising European export volumes, but FedEx will need sustained demand growth to earn a good return on the purchase price.
In addition to the cost of acquiring TNT, FedEx may also need to invest a significant amount of capital to make up for deferred investment at financially troubled TNT.
That adds to the expense of the deal.
Considering all of these factors, it's clear that FedEx wants to go through with the TNT merger in order to bolster its position in Europe.
That said, it could take years for the merger to start making a meaningful contribution to FedEx's earnings.
As a result, if EU regulators demand big concessions, that could be enough to make FedEx walk away.
10-13-2015, 05:13 AM
#3
Gets Weekends Off
Thread Starter
Joined APC: Aug 2012
Posts: 711
Milan to be 3rd largest hub in EMEA
As it moves forward with its planned takeover of TNT, FedEx Express made moves to strengthen its presence in Europe by launching a US$112 million expansion at Milan Malpensa Airport. The expansion, measuring 115,000 square feet, is scheduled to be completed sometime in mid-2016 and will accommodate the first daily courier connection from Italy to the United States.
FedEx said it expects the facility’s staff of 200 to handle 20,000 express shipments each day, coordinate 44 weekly flights to and from Malpensa, and manage 480 connections by land. The facility is expected to become FedEx’s third-largest hub in Europe, behind Paris and Cologne. Almost 50,000 square feet of the facility, known as Cargo City, will be dedicated to warehousing, 66,000 square feet to vehicle parking and 3,300 square feet to office space.
Malpensa currently handles about 500,000 tonnes of cargo each year, and said it hopes to double that number to 1 million tonnes within two years. SEA Group, which operates Malpensa and Milan Linate Airport, is investing US$16.85 million into the Cargo City project.
The recent expansion investments are part of FedEx’s overall strategy of opening more than 100 new courier service branches in three years across the Europe, Middle East and Africa (EMEA) region. So far, the company has opened 24 new branches in less than three years, created 300 jobs and introduced the “first and only direct flight from Italy to the FedEx global hub in Memphis, Tennessee,” said Vito Bernardi, Fedex’s managing director for properties and fleet, EMEA.
http://aircargoworld.com/fedex-to-expand-express-capacity-in-milan/
FedEx said it expects the facility’s staff of 200 to handle 20,000 express shipments each day, coordinate 44 weekly flights to and from Malpensa, and manage 480 connections by land. The facility is expected to become FedEx’s third-largest hub in Europe, behind Paris and Cologne. Almost 50,000 square feet of the facility, known as Cargo City, will be dedicated to warehousing, 66,000 square feet to vehicle parking and 3,300 square feet to office space.
Malpensa currently handles about 500,000 tonnes of cargo each year, and said it hopes to double that number to 1 million tonnes within two years. SEA Group, which operates Malpensa and Milan Linate Airport, is investing US$16.85 million into the Cargo City project.
The recent expansion investments are part of FedEx’s overall strategy of opening more than 100 new courier service branches in three years across the Europe, Middle East and Africa (EMEA) region. So far, the company has opened 24 new branches in less than three years, created 300 jobs and introduced the “first and only direct flight from Italy to the FedEx global hub in Memphis, Tennessee,” said Vito Bernardi, Fedex’s managing director for properties and fleet, EMEA.
http://aircargoworld.com/fedex-to-expand-express-capacity-in-milan/
Thread
Thread Starter
Forum
Replies
Last Post
