FedEx is to buy its Dutch rival TNT Express for €4.4 billion ($4.8 billion) as the US parcels delivery company looks to expand its European operations.
In a joint statement, FedEx and TNT said both management boards had reached a “conditional agreement”.
FedEx has offered shareholders €8 per share, a 33% premium on TNT’s closing share price on April 2.
It comes two years after United Parcel Service (UPS) pulled out of a €5.2 billion bid for the Dutch firm.
UPS pulled out of the deal following opposition from EU competition authorities, saying it saw “no realistic prospect” of approval for its bid from the European Commission.
Since then TNT has undertaken a restructuring program, cutting costs, selling operations and investing heavily in its road network to hold on to customers in what has been a weak European market for business package deliveries.
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FedEx and TNT Express expect the deal to be completed in the first half of 2016 and say they are confident any European competition concerns can be overcome this time.
The European regional headquarters of the combined companies will remain in the Netherlands, while FedEx has promised to maintain the TNT Express brand “for an appropriate period”.
TNT Express CEO Tex Gunning said: “This offer comes at a time of important transformations within TNT Express and we were fully geared to executing our stand-alone strategy.
“But while we did not solicit an acquisition, we truly believe that FedEx’s proposal, both from a financial and a non-financial view, is good news for all stakeholders.”
However, the terms of the takeover allow for a competitor to make an offer within the next eight weeks and for the current deal to be terminated if that offer exceeds the existing proposal by 8%.
TNT Express warned in February 2015 that it expected adverse trading conditions to continue in its main western European markets this year, as it reported a €196 million annual loss on revenues which fell 3.2% to €6.6 billion.
UPS acknowledged getting swamped by the seasonal cheer and failing to deliver thousands of orders in time for Christmas.
“The volume of air packages in our system exceeded the capacity in our network,” UPS spokeswoman Natalie Godwin said in a statement.
Now, even as the company is lionized on the holiday cover of Bloomberg Businessweek for making “dreams come true”, customers are streaming online to pummel the shipping giant.
For some of the customers the void under the tree came despite days of phone-and-Web wrangling with UPS customer service. In Houston, the Amaya family toggled between tracking their package online and waiting by the door for UPS to arrive. But after 10 days and two delays, they finally gave up hope.
Christmas is about more than just stuff, many posters acknowledged, but even some of the smaller, more symbolic gifts of Christmas got lost in transit.
“UPS understands the importance of your holiday shipments,” the company said in a Christmas Day statement on its website.
“However, the volume of air packages in our system exceeded the capacity of our network immediately preceding Christmas so some shipments were delayed.”
UPS acknowledged getting swamped by the seasonal cheer and failing to deliver thousands of orders in time for Christmas
Amazon.com, one of UPS’s biggest clients, cited UPS’s “failure” in an apologetic email to customers Wednesday morning. UPS itself is on a condolences tour, telling NBC in a statement that only “a small percentage” of packages were affected and pledging that most of these will arrive by Thursday.
The last time a significant number of UPS packages were late for Christmas was 2004, when an ice storm crippled Worldport, the UPS distribution center in Louisville, Kentucky, in the run up to the holiday. Back then employees ended up manually loading packages for days, and surprising revelers with Christmas Day deliveries. This year the company declined to call its workers in for holiday service.
It’s still unclear where the UPS network broke down, and the company has declined to specify the size of the problem. But Bloomberg Businessweek detailed the challenges likely to have stymied Santa’s corporate helper this year – and spotlighted the man who may take a fall for the year’s mishaps.
Scott Abell is known as “Mr. Peak” to the brown-shirted faithful, and he spends his whole work year outlining the company’s holiday delivery plans, scrambling hundreds of planes and thousands of trucks from his office at Worldport.
Beyond icy weather, which reportedly hampered UPS distribution hubs, the company was likely squeezed by a smaller window for holiday shopping and a record number of e-purchases being pushed through at the last minute. There were just 26 days between Thanksgiving and Christmas. At the same time, there was the continued growth of online shopping, which not only facilitates last-minute gifting but often rewards it with deeper discounts.
Online spending jumped 9%, to $37.8 billion, between November 1st and December 15th, according to the online research firm comScore, and retailers expect overall holiday sales to be up nearly 4%, exceeding $600 million.
UPS anticipated delivering 132 million bundles in the week before Christmas, according to Bloomberg Businessweek, and to meet that wave of holiday cheer, Scott Abell organized 55,000 part time workers, 23 extra planes and what amounts to a second fleet of delivery trucks.
A last-minute decision by one of UPS’s clients – reportedly Amazon.com – dumped additional packages into the system last weekend, but Scott Abell doubled the number of shifts at Worldport, still hoping to stay ahead. It wasn’t enough.
Scott Abell usually heads to Florida in January to play golf and decompress after the madness of the holidays. When he returns, the 31-year veteran of the company gathers his lieutenants for a special lemon session, detailing all that could have gone better in the weeks before.
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Delivery experts have attempted to calculate how Santa would make his impressive delivery to around 760 million children on Christmas night if he didn’t have magic on his side.
Experts from FedEx and UPS shared their calculations with National Public Radio’s Planet Money, estimating the resources they’d need to compete with Santa’s nine reindeer and unknown number of elves.
And it doesn’t come cheap. The delivery firm bosses estimate Santa would need a 12 million-strong operation with workers specializing in areas from sleigh-loading to border control and meteorology and that’s after the presents are wrapped.
Paul Tronsor from FedEx said: “It is really about international business because after all that’s what Santa is really doing here – a massive international operation…Santa is the head of this huge organization, so we expect Santa would need around 12million people. Santa Inc is massive, I don’t know of any company that has the number of employees that Santa does.”
Both companies admit Santa’s workforce probably doesn’t need to meet these exact figures – given he has the unknown advantage of festive magic on his side – but if he didn’t there’s no doubt he would be Chief Executive of the biggest organization on earth.
They predict he would need 46 international facilities each 5.2million square feet with 155 miles of conveyer belt and 9,000 employees working in present-loading alone.
Delivery experts have attempted to calculate how Santa would make his impressive delivery to around 760 million children on Christmas night if he didn’t have magic on his side
They estimate a further 7,000 employees would be needed to tweak his route mid-air, with an extra 100 meteorologists to insure he avoids poor weather and 40,000 to make sure he has the right permits to cross the world’s borders and to deal with customs staff.
Mike Mangeot of UPS says the support staff under Santa’s leadership would span all sorts of professions.
“Whether it would be human resources, finance and accounting, network planning or regulatory compliance…You can’t just fly into a country, you have to get permissions to do that.”
And it’s the sleigh that’s makes the parcel-delivery bosses really envious.
“Santa’s sled has to be absolutely ginormous,” Mike Mangeot adds.
“If you assume conservatively that each of these 760 million children get one present which weighs one pound – that’s 760 million pounds, which would take 295 747 aircraft to haul. Interestingly that is about 50 more 747s than exist in the entire world so these reindeer are doing something impressive on Christmas night.”
What a FedEx Santa would need
- 12 million members of staff including 100 border experts, 100 meteorologists and 7,000 route planners
- 46 International packing facilities where he could re-load his sleigh through the night
- Each facility would be 5.2million square feet with 155 miles of conveyer belt and 9,000 packing staff
- His sleigh would need to carry a weight of at least 760 million pounds which would take 295 747 airplanes to carry
- 40,000 customs experts to help Santa navigate across the world’s borders